Investment Objectives

The Fund aims to maximise the total level of return for investors through investment, primarily, in debt securities and money market instruments issued by the Government of Malta. The Investment Manager may also invest directly or indirectly via eligible ETFs and/or eligible CISs) up to 15% of its assets in “Non-Maltese Assets” in debt securities and/or money market instruments issued or guaranteed by Governments of EU, EEA and OECD Member States other than Malta. The Investment Manager will not be targeting debt securities of any particular duration, coupon or credit rating.

The Fund is actively managed, not managed by reference to any index.

 

Investor Profile

A typical investor in the Malta Government Bond Fund would be one who is seeking to gain exposure to the local Government Bond Market whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the Malta Government Bond Fund are those who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle.

Fund Rules

The Investment Manager will invest primarily in a portfolio of debt securities and money market instruments issued or guaranteed by the Government of Malta. The Investment Manager may invest directly in eligible collective investment schemes whose investment objective and policies are consistent with those of the Sub-Fund. The Investment Manager may also invest directly (or indirectly via eligible exchange traded funds and/or eligible collective investment schemes) up to 15% of its assets in “Non-Maltese Assets” as per below:

  • Debt securities and/or money market instruments issued or guaranteed by Governments of EU, EEA and OECD Member States other than Malta, their constituent states or their local authorities; and/or
  • Debt securities and/or money market instruments issued or guaranteed by supranational bodies of EU, EEA and OECD Member States other than Malta, their agencies, associated financial institutions or other associated bodies.
    The Investment Manager will not be targeting debt securities (including, money market instruments, bonds, notes and other debt securities) of any particular duration, coupon or credit rating. The Sub-Fund may also invest in term deposits held with credit institutions regulated in Malta and other EU, EEA and OECD Member States.

For temporary and/or defensive purposes, the Sub-Fund may invest in other short-term debt securities or fixed income instruments, money market funds, cash and cash equivalents. The Sub-Fund may also at any time hold such securities for cash management purposes, pending investment in accordance with its Investment Policy and to meet operating expenses and redemption requests.

In pursuing its Investment Objective and Investment Policy, the Sub-Fund will be subject to the Investment, Borrowing and Leverage Restrictions set out in the Prospectus and the Offering Supplement. Furthermore, this Sub-Fund shall not invest, in the aggregate, more than 10% of its assets in units or shares of other UCITS or other CISs. The Investment Manager may make use of listed and OTC FDIs (including, but not limited to, futures, forwards, options and swaps) linked to bonds, interest rates and currencies for efficient portfolio management,  hedging purposes and the reduction of risk only. The Sub-Fund will not make use of FDIs for investment purposes. 

Commentary

February 2024

Introduction

February ‘24 offered a stark illustration of the inherent duality within financial markets. While equity markets thrived, propelled by positive economic data and a shift in investor sentiment, credit markets were challenged, as such benevolent news, drove a shift in expectations for future interest rates. The contrasting performance highlighted the complex interplay of various factors that shape market movements.

Despite the seemingly benevolent news driving equity markets, the narrative in the credit markets turned sour as expectations for future interest rate cuts shifted. This anticipation of tighter monetary policy exerted downward pressure on bond prices, leading to their decline. Although high-yield bonds, particularly in Europe, offered some resistance to this trend, the broader fixed income market faced headwinds.

On the economic front, data released in February generally indicated sustained economic activity, bolstering investor confidence. Additionally, a continued decline in both headline and core inflation offered some welcome relief from inflationary concerns.

Market environment and performance

Europe’s economic landscape, following a challenging end to the prior year, vastly expected to close in a recessionary environment, proves mix, with activity showing signs of improvement and yet, weak growth prospects persisting. Consumer confidence, possibly due to households feeling optimistic about future wage growth and spending power, strengthened. Such optimism however wasn’t shared by businesses, with business sentiment across various sectors dipping in February, indicating a cautious outlook for the near future.

Indeed, the Euro area economy moved closer to stabilization in February, Purchasing Managers’ Index (PMI) survey showed, amid an expansion in services (reading 50.2 v a previous month reading of 48.4) which largely offset the weakening manufacturing segment (reading 46.5 v 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. On the price front, input cost inflation hit a ten-month high, and output charges increased at the fastest pace since last May. Finally, business confidence improved for a fifth successive month.

Meanwhile, price pressures (as measured by the consumer price index) showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates of 2.5%, pushing back expectations of interest rate cuts by the ECB.

Fund performance

In February, the CC Malta Government Bond Fund experienced a loss of 0.86%, outperforming its internally compared benchmark which recorded 0.91% loss, and aligned with the widening observed amongst European sovereign bonds.

Throughout the month, the Manager maintained its portfolio allocation after having reduced its cash exposure while increasing the portfolio’s exposure to longer-date Maltese and European sovereigns, in the previous months.

Market and investment outlook

Hopes for a rapid end to interest rate hikes faded in first months of the year as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation.

While acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were premature. The key challenge for policy makers going forward is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterpart, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting the resilient growth observed in Southern European economies.

The anticipated rate cuts are expected to be favourable, leading to further tightening within the bond market. This positive outlook encourages continued investment in the space.

Going forward, the manager will continue to assess the market landscape and capitalize on appealing opportunities, particularly within the sovereign space. Consistent with recent actions, the manager will tailor the portfolio to match prevailing yield conditions while strategically increasing its duration. Additionally, the manager aims to further utilize the full 15% allocation allowed for bonds not domiciled in Malta, seeking a potentially higher carry.

A quick introduction to our Malta Government Bond Fund.

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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

Bonds

MIN. INITIAL INVESTMENT

€2500

FUND TYPE

UCITS

BASE CURRENCY

EUR

5 year performance*

-8.34%

*View Performance History below
Inception Date: 21 Apr 2017
ISIN: MT7000017992
Bloomberg Ticker: CCMGBFA MV
Distribution Yield (%): N/A
Underlying Yield (%): 3.23
Distribution: N/A
Total Net Assets: €31.47 mn
Month end NAV in EUR: 92.89
Number of Holdings: 39
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.

Performance To Date (EUR)

Top 10 Holdings

1.00% MGS 2031
9.0%
4.50% MGS 2028
8.8%
5.25% MGS 2030
7.8%
4.45% MGS 2032
5.4%
4.00% MGS 2033
4.0%
4.30% MGS 2033
3.9%
5.20% MGS 2031
3.6%
5.10% MGS 2029
3.5%
3.95% MGS 2028
3.2%
2.30% MGS 2029
3.1%
Data for major sector breakdown is not available for this fund.

Maturity Buckets*

16.9%
0-5 Years
58.6%
5-10 Years
16.9%
10 Years+
*based on the Next Call Date (also includes cash)
Data for credit ratings is not available for this fund.

Risk & Reward Profile

1
2
3
4
5
6
7
Lower Risk

Potentialy Lower Reward

Higher Risk

Potentialy Higher Reward

Top Holdings by Country*

Malta
79.9%
Germany
2.6%
Belgium
2.1%
Portugal
1.4%
Spain
1.1%
France
1.0%
Romania
0.8%
Slovenia
0.8%
United States
0.7%
Croatia
0.7%
*including exposures to CIS

Asset Allocation

Cash 5.4%
Bonds 92.4%
CIS/ETFs 2.2%

Performance History (EUR)*

1 Year

1.61%

3 Year

-14.38%

5 Year

-8.34%

* The Accumulator Share Class (Class A) was launched on 21 April 2017.
** 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. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

Currency Allocation

Euro 99.0%
USD 1.0%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objectives

    The Fund aims to maximise the total level of return for investors through investment, primarily, in debt securities and money market instruments issued by the Government of Malta. The Investment Manager may also invest directly or indirectly via eligible ETFs and/or eligible CISs) up to 15% of its assets in “Non-Maltese Assets” in debt securities and/or money market instruments issued or guaranteed by Governments of EU, EEA and OECD Member States other than Malta. The Investment Manager will not be targeting debt securities of any particular duration, coupon or credit rating.

    The Fund is actively managed, not managed by reference to any index.

     

  • Investor profile

    A typical investor in the Malta Government Bond Fund would be one who is seeking to gain exposure to the local Government Bond Market whilst seeking to accumulate wealth and save over time in a product that re-invests coupons received on a gross basis. Furthermore, investors in the Malta Government Bond Fund are those who are planning to hold on to their investment for the medium-to-long term so as to benefit from the compound interest effect whilst also participating in the interest rate cycle.

    Investor Profile Icon
  • 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

  • Commentary

    February 2024

    Introduction

    February ‘24 offered a stark illustration of the inherent duality within financial markets. While equity markets thrived, propelled by positive economic data and a shift in investor sentiment, credit markets were challenged, as such benevolent news, drove a shift in expectations for future interest rates. The contrasting performance highlighted the complex interplay of various factors that shape market movements.

    Despite the seemingly benevolent news driving equity markets, the narrative in the credit markets turned sour as expectations for future interest rate cuts shifted. This anticipation of tighter monetary policy exerted downward pressure on bond prices, leading to their decline. Although high-yield bonds, particularly in Europe, offered some resistance to this trend, the broader fixed income market faced headwinds.

    On the economic front, data released in February generally indicated sustained economic activity, bolstering investor confidence. Additionally, a continued decline in both headline and core inflation offered some welcome relief from inflationary concerns.

    Market environment and performance

    Europe’s economic landscape, following a challenging end to the prior year, vastly expected to close in a recessionary environment, proves mix, with activity showing signs of improvement and yet, weak growth prospects persisting. Consumer confidence, possibly due to households feeling optimistic about future wage growth and spending power, strengthened. Such optimism however wasn’t shared by businesses, with business sentiment across various sectors dipping in February, indicating a cautious outlook for the near future.

    Indeed, the Euro area economy moved closer to stabilization in February, Purchasing Managers’ Index (PMI) survey showed, amid an expansion in services (reading 50.2 v a previous month reading of 48.4) which largely offset the weakening manufacturing segment (reading 46.5 v 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. On the price front, input cost inflation hit a ten-month high, and output charges increased at the fastest pace since last May. Finally, business confidence improved for a fifth successive month.

    Meanwhile, price pressures (as measured by the consumer price index) showed signs of peaking with inflation easing to 2.6% from 2.8% in January, but remained slightly above preliminary estimates of 2.5%, pushing back expectations of interest rate cuts by the ECB.

    Fund performance

    In February, the CC Malta Government Bond Fund experienced a loss of 0.86%, outperforming its internally compared benchmark which recorded 0.91% loss, and aligned with the widening observed amongst European sovereign bonds.

    Throughout the month, the Manager maintained its portfolio allocation after having reduced its cash exposure while increasing the portfolio’s exposure to longer-date Maltese and European sovereigns, in the previous months.

    Market and investment outlook

    Hopes for a rapid end to interest rate hikes faded in first months of the year as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation.

    While acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were premature. The key challenge for policy makers going forward is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterpart, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting the resilient growth observed in Southern European economies.

    The anticipated rate cuts are expected to be favourable, leading to further tightening within the bond market. This positive outlook encourages continued investment in the space.

    Going forward, the manager will continue to assess the market landscape and capitalize on appealing opportunities, particularly within the sovereign space. Consistent with recent actions, the manager will tailor the portfolio to match prevailing yield conditions while strategically increasing its duration. Additionally, the manager aims to further utilize the full 15% allocation allowed for bonds not domiciled in Malta, seeking a potentially higher carry.

  • 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

    Bonds

    MIN. INITIAL INVESTMENT

    €2500

    FUND TYPE

    UCITS

    BASE CURRENCY

    EUR

    5 year performance*

    -8.34%

    *View Performance History below
    Inception Date: 21 Apr 2017
    ISIN: MT7000017992
    Bloomberg Ticker: CCMGBFA MV
    Distribution Yield (%): N/A
    Underlying Yield (%): 3.23
    Distribution: N/A
    Total Net Assets: €31.47 mn
    Month end NAV in EUR: 92.89
    Number of Holdings: 39
    Auditors: Deloitte Malta
    Legal Advisor: Ganado Advocates
    Custodian: Sparkasse Bank Malta p.l.c.

    Performance To Date (EUR)

    Risk & Reward Profile

    1
    2
    3
    4
    5
    6
    7
    Lower Risk

    Potentialy Lower Reward

    Higher Risk

    Potentialy Higher Reward

    Top 10 Holdings

    1.00% MGS 2031
    9.0%
    4.50% MGS 2028
    8.8%
    5.25% MGS 2030
    7.8%
    4.45% MGS 2032
    5.4%
    4.00% MGS 2033
    4.0%
    4.30% MGS 2033
    3.9%
    5.20% MGS 2031
    3.6%
    5.10% MGS 2029
    3.5%
    3.95% MGS 2028
    3.2%
    2.30% MGS 2029
    3.1%

    Top Holdings by Country*

    Malta
    79.9%
    Germany
    2.6%
    Belgium
    2.1%
    Portugal
    1.4%
    Spain
    1.1%
    France
    1.0%
    Romania
    0.8%
    Slovenia
    0.8%
    United States
    0.7%
    Croatia
    0.7%
    *including exposures to CIS

    Asset Allocation

    Cash 5.4%
    Bonds 92.4%
    CIS/ETFs 2.2%

    Maturity Buckets*

    16.9%
    0-5 Years
    58.6%
    5-10 Years
    16.9%
    10 Years+
    *based on the Next Call Date (also includes cash)

    Performance History (EUR)*

    1 Year

    1.61%

    3 Year

    -14.38%

    5 Year

    -8.34%

    * The Accumulator Share Class (Class A) was launched on 21 April 2017.
    ** 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. Hence returns may not be achieved and you may lose all or part of your investment in the Fund. Currency fluctuations may affect the value of investments and any derived income.

    Currency Allocation

    Euro 99.0%
    USD 1.0%
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