Malta Balanced Income Fund Accumulator

The objective of the Sub-Fund is to endeavour to maximise the total level of return for investors through investment, primarily in debt securities and money market instruments issued or guaranteed by the Government of Malta, and equities and corporate bonds issued and listed on the Malta Stock Exchange.

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

• The Investment Manager may invest up to 10% of the net assets of the Sub-Fund in un-listed Maltese and/or Non-Maltese Assets. As far as the “Non-Maltese Assets” segment of the Sub-Fund is concerned, the Investment Manager will not be targeting any international debt securities of any particular duration or coupon. However, the Sub-Fund is generally not expected to hold investments that, at the time of investment, are rated below “B3” by Moody’s or below “B-“ by S&P or in bonds determined to be of comparable quality by the Investment Manager.
• The Investment Manager will not be targeting any local debt securities (debt securities and money market instruments issued or guaranteed by the Government of Malta and/or local corporate bonds issued and listed on the Malta Stock Exchange) of any particular duration or coupon.
• The Investment Manager will, at all times, maintain an exposure to local equity securities issued and listed on the Malta Stock Exchange and Regulated Market in Malta of at least 25% of the value of the Net Assets of the Sub-Fund. In addition, the Investment Manager will, at all times, maintain a direct exposure to local debt securities (debt securities and money market instruments issued or guaranteed by the Government of Malta and/or local corporate bonds issued and listed on the Malta Stock Exchange) of at least 25% of the value of the Net Assets of the Sub-Fund.
• The Sub-Fund may also invest in term deposits held with credit institutions regulated in Malta and other EU, EEA and OECD Member States.
• This Sub-Fund shall not invest, in the aggregate, more than 10% of the Net Assets of the Sub-Fund in units or shares of other UCITS or other CISs.

August 2020

In August, the Malta Balanced Income Fund decreased by -1.34%. The spike in Covid-19 cases in Malta has resulted in an increase in risk aversion attitude in the month of August, as some investors sold their positions in various sectors. Nonetheless, the Investment Managers took advantage of the weakness in prices to continue to build on positions, which in their view remain attractive. The exposure to equities remained unchanged for the month as the Investment Managers continued to focus on names with strong balance sheets and attractive business models. Cash was deployed in stable companies, which could generate potential capital gains.

As at the end of August, the fund had a 58 percent exposure to bonds, 36 percent exposure to equities and 6 percent exposure to cash. The cash position will give the IMs an opportunity to strength those positions which they believe will generate alpha to the fund’s performance.

The IMs are confident that as business come out of this difficult situation brought about by Covid-19, the selected local companies will continue to benefit and will continue to strive to capture this positivity and translate it in gains for shareholders. The IMs plan is to continue adding to the current allocations should markets permit.