Investment Objectives
The Fund aims to deliver a positive total return in any three year period from a flexibly managed portfolio of global assets whilst maintaining a monthly VaR with a 99% confidence interval at or below 5% at all times. The Investment Manager shall invest primarily in a diversified portfolio across a wide spectrum of industries and sectors primarily via bonds, equities and eligible ETFs. Investment in these asset classes either directly or indirectly through UCITS Funds and/ or eligible non UCITS Funds.
The Fund is actively managed, not managed by reference to any index.
The Fund is classified under Article 6 of the SFDR meaning that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.
Investor Profile
Fund Rules
A quick introduction to our Solid Future Defensive Fund
Key Facts & Performance
Fund Manager
Jordan Portelli
Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.
PRICE (EUR)
€
ASSET CLASS
Mixed
MIN. INITIAL INVESTMENT
€2500
FUND TYPE
UCITS
BASE CURRENCY
EUR
5 year performance*
-5.28%
*View Performance History below
Inception Date: 25 Oct 2011
ISIN: MT7000004917
Bloomberg Ticker: SFUDEFP MV
Distribution Yield (%): N/A
Underlying Yield (%): N/A
Distribution: N/A
Total Net Assets: 16.3 mn
Month end NAV in EUR: 139.92
Number of Holdings:
Auditors: PriceWaterhouse Coopers
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
Performance To Date (EUR)
Top 10 Holdings
10.7%
5.1%
4.1%
4.0%
3.5%
2.0%
1.9%
1.8%
1.6%
1.5%
Major Sector Breakdown*
Government
21.3%
Financials
20.0%
Consumer Staples
12.5%
Consumer Discretionary
11.5%
Communications
10.9%
Information Technology
6.1%
Credit Ratings*
Risk & Reward Profile
Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top Holdings by Country*
48.9%
34.8%
6.9%
6.6%
1.9%
0.8%
0.1%
Asset Allocation*
Performance History (EUR)*
1 year
5.77%
3 year
-2.70%
5 year
-5.28%
Currency Allocation
Interested in this product?
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Investment Objectives
The Fund aims to deliver a positive total return in any three year period from a flexibly managed portfolio of global assets whilst maintaining a monthly VaR with a 99% confidence interval at or below 5% at all times. The Investment Manager shall invest primarily in a diversified portfolio across a wide spectrum of industries and sectors primarily via bonds, equities and eligible ETFs. Investment in these asset classes either directly or indirectly through UCITS Funds and/ or eligible non UCITS Funds.
The Fund is actively managed, not managed by reference to any index.
The Fund is classified under Article 6 of the SFDR meaning that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities.
-
Investor profile
-
Fund Rules
The Investment Manager of the CC High Income Bond Funds – EUR and USD has the duty to ensure that the underlying investments of the funds are well diversified. According to the prospectus, the investment manager has to abide by a number of investment restrictions to safeguard the value of the assets
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Commentary
February 2024
Introduction
February presented a picture of rather exacerbated optimism in global financial markets when compared to the fragile interplay between the global economic growth, the tightening financial conditions and the simmering political tensions. As the early signs of a possible acceleration in global output were marked by leading economic indicators, the performers continued being the US, Japan, and the emerging markets, particularly India and Brazil. Additionally, China’s continued economic expansion, although not above expectations, offered some stability to the overall landscape. However, the outlook remains somewhat subdued given the projected slowdown for global output growth in 2024 compared to last year. It could be argued that the “soft landing” scenario has already become the base scenario with risks regarding the economic growth coming only from the upside. As inflationary pressures have continued their downward path across regions, it is rather the geopolitical tensions which might currently cast a long shadow over the macroeconomic environment. Beyond immediate conflicts such as Ukraine and Gaza, such uncertainties also stem from rising tensions between the US and its allies on one hand and China on the other, as trade disputes and commercial disagreements continue raising concerns about potential disruptions to global supply chains and de-globalisation. In addition, the rebalancing of power on the geopolitical stage as some emerging markets push for a recognition of their newly-discovered economic prowess into political might constitute an additional layer of uncertainty to the current situation. The coming quarters alongside the outcome of the US elections will be crucial in determining the trajectory of global financial markets. Beyond the apparent positive market momentum, navigating through these challenges going forward will not be easy.
From the monetary front, the FED minutes from its January policy meeting revealed its worries about the possibility of inflation remaining stubbornly high which could keep interest rated at a 23-year high longer than markets previously expected. While an interest rate cut in the March meeting is now out of discussion, market participants now view the second half of the year as bringing several rate cuts, in line with the FED’s expectations at the beginning of the year. In Europe, the ECB does look more positive on the perspectives of reigning in price rises, as it is likely to cut its own inflation projections during the March meeting, particularly due to lower energy prices. But this alone will not be sufficient to reverse the historic policy tightening process, especially since wage growth remained strong and the unit labour cost was sharply higher due in part to a slump in productivity.
Despite an expected breather after a three-month rally, equity markets posted another stellar performance in February pushed particularly in the last week by another Nvidia excellent earnings report. There were two clear trends emerging in the markets – on one hand, the AI hype pushing forward and leading to some valuation metrics which are clearly out of bounds compared to historical averages, on the other the beginning of a disconnect within the famed Magnificent 7. While Nvidia, Meta and Amazon continued outperforming the market, Tesla and more recently Apple and Alphabet are beginning to show signs of weakness for various reasons, be it that the EVs market does not shine anymore as per market participants previous opinion, or that the latter companies are not on top of the surging AI game. This only initiates providing some potential answers to investors which at some point became oblivious to the mortality or the maturity cycle of any business. It also dissipates a bit the pressure which was levied on the active managers last year when they had an almost impossible task as both market concentration and outperformance was coming from a few names. Considering the various complications markets are due to sidestep in the near future, there seems to be some hope left for active portfolio management after all.
Market Environment and Performance
February’s Purchasing Managers’ Index (PMI) indicators showed that the Euro area economy moved closer to stabilization, amid an expansion in services (reading of 50.2 versus the previous month reading of 48.4) which largely offset the weakening in the manufacturing segment (reading of 46.5 versus a previous month reading of 46.6). Inflows of new orders fell the least since June 2023, while the rate of employment growth was at a seven-month high. Meanwhile price pressures showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates pushing back expectations of interest rate cuts by the ECB.
The US economy continued to defy some earlier slowdown displaying signs of continued strength. Consumer spending, business activity and employment all indicated a healthy expansion to start the year. The labour market remained particularly robust as the latest jobs reports showed a significant increase nonfarm payroll and a near half-century low employment rate. Annual inflation rate in the US increased to 3.2% in February from a five-month low of 3.1% recorded the previous month, as energy prices cooled at a slower pace. Core consumer prices eased to a two-and-a-half-year low of 3.8%.
February witnessed a continuation of the positive trend that began in late 2023, as global equity markets surged with major benchmarks reaching new highs. This upswing was driven by a resilient US economy which instilled investor confidence, compounded by a continuation of the ongoing excitement surrounding advancements in AI which fuelled interest in technology-related stocks. As well, after a sluggish January, emerging markets, particularly China experienced significant gains, bolstered by positive expectations regarding authorities’ actions to prop up the local stock market. The S&P 500 index gained 5.66% supported by the industrials, consumer discretionary and materials sectors. European markets also reached all time high levels as the EuroStoxx50 and the DAX gained 4.58% and 4.58% respectively, with consumer discretionary, financial and industrial names leading the way.
Looking at the bond market, Government bond yields rose, as the market continued to anticipate a benevolent interest rate trajectory. Investment grade ended the month lower, with European IG outperforming its US counterpart. High yield (+0.35%) – aided by the lower duration
Fund Performance
In the month of February the Solid Future Defensive Fund registered a 0.20 per cent gain. On the equity allocation, the Fund’s allocation has been readjusted during the month, as the Manager reposition it to better respond to the recent market developments. New conviction name Palo Alto Networks has been added based on compelling fundamental factors and a very interesting risk-adjusted entry levels. Positions in Applied Materials, Qualcomm, McDonald’s Corp and Wisdom Tree Artificial Intelligence ETF have been liquidated following an impressive market rally as sizeable profits have already been achieved. Finally, the Fund’s allocations to Alphabet and Amazon have been slightly trimmed with a view to marking some of the impressive profits accrued since opening these positions, as well as limiting the Fund’s exposure to idiosyncratic risk. Cash levels have been slightly increased. From the fixed income front, the Manager took opportunity to de-risk the portfolio at higher yields. Positions in Encore Capital Group INC, Forvia and Dufry were closed, while positions in AP Moeller-Maerks and Ford were initiated.
Market and Investment Outlook
Going forward, the Manager believes the global economic landscape remains complex, as inflationary pressures might persist while central bankers remain hesitant on a decisive action regarding interest rates due to economic growth concerns. Geopolitical tensions and supply chain disruptions add further complexity to the macroeconomic landscape. The overall picture remains broadly positive as the US economy clearly outperforms other developed markets and the Chinese economy is hopeful about a much necessary boost provided by public subsidies programs. On such a backdrop, the Manager has tempered expectations about equity markets returns in the coming quarters, compounded by the impressive market rally recorded in the last three months, anticipating heightened volatility along the way. The Fund will continue its diversified allocation with focus on quality companies, particularly those which have seen recent underperformance. Nevertheless, specific allocations to growth companies should be expected going forward through tactical plays in market pockets experiencing corrections. Corporate actions, geopolitics and technical indicators will continue being considered for particular allocations, while cash levels will be used as a tool for proactive action in case of markets deterioration.
-
Key facts & performance
Fund Manager
Jordan Portelli
Jordan is CIO at CC Finance Group. He has extensive experience in research and portfolio management with various institutions. Today he is responsible of the group’s investment strategy and manages credit and multi-asset strategies.
PRICE (EUR)
€
ASSET CLASS
Mixed
MIN. INITIAL INVESTMENT
€2500
FUND TYPE
UCITS
BASE CURRENCY
EUR
5 year performance*
-5.28%
*View Performance History below
Inception Date: 25 Oct 2011
ISIN: MT7000004917
Bloomberg Ticker: SFUDEFP MV
Distribution Yield (%): N/A
Underlying Yield (%): N/A
Distribution: N/A
Total Net Assets: 16.3 mn
Month end NAV in EUR: 139.92
Number of Holdings:
Auditors: PriceWaterhouse Coopers
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.
Performance To Date (EUR)
Risk & Reward Profile
1234567Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top 10 Holdings
Amundi Euro Gov Bond 10-15Y10.7%
Amundi Euro Gov Bond 7-10Y5.1%
iShares Euro Corp Large Cap4.1%
iShares Euro HY Corp4.0%
iShares Fallen Angels HY Corp3.5%
3% Govt of France 20332.0%
iShares USD HY Corp1.9%
Walt Disney Co/The1.8%
iShares MSCI World1.6%
Amazon Inc1.5%
Top Holdings by Country*
Europe ex UK48.9%
North America34.8%
Emerging/Frontier Markets ex China6.9%
UK6.6%
Japan1.9%
Asia Pacific ex Japan0.8%
China0.1%
** Including exposure to CIS, adopting a look-through approachMajor Sector Breakdown*
Government
21.3%
Financials
20.0%
Consumer Staples
12.5%
Consumer Discretionary
11.5%
Communications
10.9%
Information Technology
6.1%
*** Adopting a look-through approachAsset Allocation*
Conventional Bonds 66.5%Equity 29.2%Absolute Return 0.0%Cash 4.3%* Without adopting a look-through approachPerformance History (EUR)*
1 year
5.77%
3 year
-2.70%
5 year
-5.28%
Returns quoted net of TER. Entry and exit charges may reduce returns for investors.The Annualised rate is an indication of the average growth of the Fund over one year. The value of the investment and the income yield derived from the investment, if any, may go down as well as up and past performance is not necessarily indicative of future performance, nor a reliable guide to future performance. Currency fluctuations may affect the value of investments and any derived income.Currency Allocation
Euro 69.3%USD 30.1%GBP 0.6% -
Downloads
Commentary
February 2024
Introduction
February presented a picture of rather exacerbated optimism in global financial markets when compared to the fragile interplay between the global economic growth, the tightening financial conditions and the simmering political tensions. As the early signs of a possible acceleration in global output were marked by leading economic indicators, the performers continued being the US, Japan, and the emerging markets, particularly India and Brazil. Additionally, China’s continued economic expansion, although not above expectations, offered some stability to the overall landscape. However, the outlook remains somewhat subdued given the projected slowdown for global output growth in 2024 compared to last year. It could be argued that the “soft landing” scenario has already become the base scenario with risks regarding the economic growth coming only from the upside. As inflationary pressures have continued their downward path across regions, it is rather the geopolitical tensions which might currently cast a long shadow over the macroeconomic environment. Beyond immediate conflicts such as Ukraine and Gaza, such uncertainties also stem from rising tensions between the US and its allies on one hand and China on the other, as trade disputes and commercial disagreements continue raising concerns about potential disruptions to global supply chains and de-globalisation. In addition, the rebalancing of power on the geopolitical stage as some emerging markets push for a recognition of their newly-discovered economic prowess into political might constitute an additional layer of uncertainty to the current situation. The coming quarters alongside the outcome of the US elections will be crucial in determining the trajectory of global financial markets. Beyond the apparent positive market momentum, navigating through these challenges going forward will not be easy.
From the monetary front, the FED minutes from its January policy meeting revealed its worries about the possibility of inflation remaining stubbornly high which could keep interest rated at a 23-year high longer than markets previously expected. While an interest rate cut in the March meeting is now out of discussion, market participants now view the second half of the year as bringing several rate cuts, in line with the FED’s expectations at the beginning of the year. In Europe, the ECB does look more positive on the perspectives of reigning in price rises, as it is likely to cut its own inflation projections during the March meeting, particularly due to lower energy prices. But this alone will not be sufficient to reverse the historic policy tightening process, especially since wage growth remained strong and the unit labour cost was sharply higher due in part to a slump in productivity.
Despite an expected breather after a three-month rally, equity markets posted another stellar performance in February pushed particularly in the last week by another Nvidia excellent earnings report. There were two clear trends emerging in the markets – on one hand, the AI hype pushing forward and leading to some valuation metrics which are clearly out of bounds compared to historical averages, on the other the beginning of a disconnect within the famed Magnificent 7. While Nvidia, Meta and Amazon continued outperforming the market, Tesla and more recently Apple and Alphabet are beginning to show signs of weakness for various reasons, be it that the EVs market does not shine anymore as per market participants previous opinion, or that the latter companies are not on top of the surging AI game. This only initiates providing some potential answers to investors which at some point became oblivious to the mortality or the maturity cycle of any business. It also dissipates a bit the pressure which was levied on the active managers last year when they had an almost impossible task as both market concentration and outperformance was coming from a few names. Considering the various complications markets are due to sidestep in the near future, there seems to be some hope left for active portfolio management after all.
Market Environment and Performance
February’s Purchasing Managers’ Index (PMI) indicators showed that the Euro area economy moved closer to stabilization, amid an expansion in services (reading of 50.2 versus the previous month reading of 48.4) which largely offset the weakening in the manufacturing segment (reading of 46.5 versus a previous month reading of 46.6). Inflows of new orders fell the least since June 2023, while the rate of employment growth was at a seven-month high. Meanwhile price pressures showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates pushing back expectations of interest rate cuts by the ECB.
The US economy continued to defy some earlier slowdown displaying signs of continued strength. Consumer spending, business activity and employment all indicated a healthy expansion to start the year. The labour market remained particularly robust as the latest jobs reports showed a significant increase nonfarm payroll and a near half-century low employment rate. Annual inflation rate in the US increased to 3.2% in February from a five-month low of 3.1% recorded the previous month, as energy prices cooled at a slower pace. Core consumer prices eased to a two-and-a-half-year low of 3.8%.
February witnessed a continuation of the positive trend that began in late 2023, as global equity markets surged with major benchmarks reaching new highs. This upswing was driven by a resilient US economy which instilled investor confidence, compounded by a continuation of the ongoing excitement surrounding advancements in AI which fuelled interest in technology-related stocks. As well, after a sluggish January, emerging markets, particularly China experienced significant gains, bolstered by positive expectations regarding authorities’ actions to prop up the local stock market. The S&P 500 index gained 5.66% supported by the industrials, consumer discretionary and materials sectors. European markets also reached all time high levels as the EuroStoxx50 and the DAX gained 4.58% and 4.58% respectively, with consumer discretionary, financial and industrial names leading the way.
Looking at the bond market, Government bond yields rose, as the market continued to anticipate a benevolent interest rate trajectory. Investment grade ended the month lower, with European IG outperforming its US counterpart. High yield (+0.35%) – aided by the lower duration
Fund Performance
In the month of February the Solid Future Defensive Fund registered a 0.20 per cent gain. On the equity allocation, the Fund’s allocation has been readjusted during the month, as the Manager reposition it to better respond to the recent market developments. New conviction name Palo Alto Networks has been added based on compelling fundamental factors and a very interesting risk-adjusted entry levels. Positions in Applied Materials, Qualcomm, McDonald’s Corp and Wisdom Tree Artificial Intelligence ETF have been liquidated following an impressive market rally as sizeable profits have already been achieved. Finally, the Fund’s allocations to Alphabet and Amazon have been slightly trimmed with a view to marking some of the impressive profits accrued since opening these positions, as well as limiting the Fund’s exposure to idiosyncratic risk. Cash levels have been slightly increased. From the fixed income front, the Manager took opportunity to de-risk the portfolio at higher yields. Positions in Encore Capital Group INC, Forvia and Dufry were closed, while positions in AP Moeller-Maerks and Ford were initiated.
Market and Investment Outlook
Going forward, the Manager believes the global economic landscape remains complex, as inflationary pressures might persist while central bankers remain hesitant on a decisive action regarding interest rates due to economic growth concerns. Geopolitical tensions and supply chain disruptions add further complexity to the macroeconomic landscape. The overall picture remains broadly positive as the US economy clearly outperforms other developed markets and the Chinese economy is hopeful about a much necessary boost provided by public subsidies programs. On such a backdrop, the Manager has tempered expectations about equity markets returns in the coming quarters, compounded by the impressive market rally recorded in the last three months, anticipating heightened volatility along the way. The Fund will continue its diversified allocation with focus on quality companies, particularly those which have seen recent underperformance. Nevertheless, specific allocations to growth companies should be expected going forward through tactical plays in market pockets experiencing corrections. Corporate actions, geopolitics and technical indicators will continue being considered for particular allocations, while cash levels will be used as a tool for proactive action in case of markets deterioration.