Investment Objective

The Fund aims to maximise the total level of return through investment, primarily in debt securities and money market instruments issued by the Government of Malta, and equities and corporate bonds issued and listed on the MSE.

The Investment Manager may also invest directly or indirectly up to 15% of its assets in “Non- Maltese Assets”. The Investment Manager will maintain an exposure to local debt securities of at least 55% of the value of the Net Assets of the Fund.

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

 

Investor Profile

A typical investor in the Malta High Income Fund would be to one who is seeking to gain exposure to the local Government Bond Market and the local corporate bond and local equity markets, either by achieving capital growth and accumulation of wealth via the Accumulation Share Class, or by receiving periodical distributions which the Malta High Income Fund benefits from time to time via the Distribution Share Class.

Fund Rules

The Investment Manager aims to invest at least 85% of the Net Assets in a portfolio of income bearing securities issued or guaranteed by the Government of Malta, as well as equities and corporate bonds issued and listed on the Malta Stock Exchange.

Such exposure may also be obtained by investing in eligible collective investment schemes whose investment objective and policies are consistent with those of the Malta High Income Fund.

If the Fund invests in eligible collective investment schemes managed by the Investment Manager, the Investment Manager shall reimburse the Sub-Fund any investment management and/or performance fees, as well as any applicable subscription/redemption charges, received in connection with the Sub-Fund’s investment in the eligible collective investment scheme.

  • The Investment Manager will, at all times, maintain a direct exposure to local debt securities (issued or guaranteed by the Government of Malta and/or issued and listed on the Malta Stock Exchange) of at least 55% of the value of the Net Assets of the Fund.
  • The Investment Manager may invest up to 10% of the net assets of the Fund in un-listed Maltese and/or Non-Maltese Assets rated B- or higher or in bonds determined to be of comparable quality by the Investment Manager
  • The Fund may also invest in term deposits held with Banks regulated in Malta and other EU, EEA and OECD Member States
  • This Fund shall not invest, in the aggregate, more than 10% of the Net Assets of the Fund in units or shares of other UCITS or other CISs

Commentary

April 2024

Introduction

The narrative for credit markets underwent a dramatic shift in April.  Previously anticipating a dovish pivot from the Federal Reserve (Fed), investors were caught off guard by hotter-than-expected inflation data and a first quarter US GDP print that while weak on first-glance, showed resilient private demand. The former reignited concerns about persistent inflation and pushed back expectations for interest rate cuts. The consequence was a swift and significant rise in bond yields, particularly at the belly and longer-end of the maturity spectrum.

This repricing of interest rate expectations had a negative impact on bond prices with a broad sell-off felt across various segments. Generally, government debt and bonds most sensitive to fluctuations in benchmark yields, experienced steeper losses compared with corporate high yield bonds. Propelled by a high correlation, the repricing extended beyond the US with developed market credit in Europe also witnessing yield increases, albeit to a lesser extent. The policy direction in Europe now starkly differs, with the ECB – in its April meeting – laying the groundwork for a potential rate cut in June, acknowledging the disinflationary trend observed in the eurozone. However, the ECB maintained a cautious tone, emphasizing a data-dependent approach. Their monetary policy statement explicitly avoided pre-committing to a specific rate path. This underscores the ECB’s desire to retain flexibility in the face of evolving economic data and the ongoing situation in the global economy.

Market environment and performance

The Eurozone economy continues to present a picture of continued, albeit moderating, recovery. the eurozone economy grew in Q1 with GDP expanding by 0.3% QoQ, following the -0.1% decline in Q4 2023. The German economy rebounded with 0.2% growth after a -0.5% decline in Q4.

Indeed, the Euro area economy moved closer to stabilization in April, Purchasing Managers’ Index (PMI) survey showed, amid a convincing recovery in services (reading 53.3 v 51.5), offsetting the deteriorating manufacturing segment (reading 45.7 v 46.1). Evidence of a two-speed economy. Overall, increased sales supported greater business activity in April. New orders placed with private sector firms in the eurozone rose for the first time since May 2023, albeit only marginally, as a steeper fall in demand for goods partially offset greater new business at services companies. Consequently, employment growth was the sharpest since mid-2023. On the price front, the survey signaled stronger inflationary pressures, with increases observed in both input costs and output charges.

Inflation, a key concern for policy makers, continued to ease. While, headline HICP inflation remained steady at 2.4% YoY in April, in-line with expectations, core prices which exclude volatile food and energy prices, cooled to 2.7% – a 9th successive decline.

The ECB Governing Council, in its April meeting, held the main refinancing operations rate steady at 4.5%, yet opening up the possibility of reducing the level of policy restriction, if the ECB becomes more confident that inflation is moving steadily toward the 2% target. President Lagarde acknowledged that inflation has continued to decline, with most measures of underlying inflation and wage growth easing.

Fund performance

In April, the Malta High Income Fund registered a loss of 0.16% for the month, underperforming its internally compared benchmark which saw 0.52% gain, aided by its exposure to locally listed equities which performed fairly well in contrast to the fixed income space.

Market and investment outlook

The local market, alienated from global factors such as rising yields and reversal in expectations, have in April performed well, outperforming other developed markets. The economy too, alike other southern European nations, continues to exceed expectations noting a substantially higher GDP growth rate for the full year 2023 (4.3%) compared to a 0.4% growth in the Euro area, lagged by the bloc’s largest economies which have thus far struggled to turn the corner. Unemployment rate meanwhile revolves at historical lows, below 3%. From a pricing stand point, inflationary pressures eased to a 27-month low of 2.7%. The outlook remains upbeat amid expectations of lower interest rates, a moderating cost of living squeeze and signs of recovering household and corporate demand. That said, optimism for the year ahead remains.

From an investment management perspective, the managers seek to continue increasing the fund’s exposure to foreign names as they aim to achieve a dual benefit: improved portfolio performance and enhanced liquidity; an element which the local market currently does not offer and which have markedly worsened following the recent influx of local bond offerings. As new bonds, justifiably, reflect current market conditions in terms of yield offered, they’ve created a disruptive cycle. One whereby market participants chase the new higher-yielding bonds at the expense of low coupon issues which struggle to recover on the back of an active primary market. Ultimately, impacting overall performance of secondary market issues.

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*

-2.31%

*View Performance History below
Inception Date: 10 Apr 2018
ISIN: MT7000022281
Bloomberg Ticker: CCMIFAB MV
Distribution Yield (%): 4.00
Underlying Yield (%): 2.88
Distribution: 30/04 & 31/10
Total Net Assets: €19.93
Month end NAV in EUR: 84.39
Number of Holdings: 76
Auditors: Deloitte Malta
Legal Advisor: Ganado Advocates
Custodian: Sparkasse Bank Malta p.l.c.

Performance To Date (EUR)

Top 10 Holdings

Amundi Euro Govt. Bond 10-15Y
4.2%
PG plc
3.8%
4% Central Business Centres 2033
3.4%
3.9% Browns Pharma 2031
3.0%
Harvest Technology plc
3.0%
3.5% GO plc 2031
3.0%
4.35% SD Finance plc 2027
2.8%
4.65% Smartcare Finance plc 2031
2.7%
GO plc
2.6%
3.75% Tum Finance plc 2029
2.5%

Major Sector Breakdown*

Financials
51.7%
Consumer Staples
11.7%
Consumer Discretionary
11.3%
Asset 7
Communications
7.9%
Funds
6.2%
Information Technology
4.2%
*including exposures to CIS

Maturity Buckets*

33.8%
0-5 Years
35.7%
5-10 Years
0.8%
10 Years+
*based on the Next Call Date
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
90.9%
Other
9.1%
*including exposures to CIS and Cash

Asset Allocation*

Cash 0.7%
Bonds 76.4%
Equities 22.8%
* including exposures to CIS

Performance History (EUR)*

1 Year

1.00%

3 Year

-3.66%

5 Year

-2.31%

*The Distributor Share Class (Class B) was launched on 10 April 2018
** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding. 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.
*** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

Currency Allocation

Euro 100%
Data for risk statistics is not available for this fund.

Interested in this product?

  • Investment Objective

    The Fund aims to maximise the total level of return through investment, primarily in debt securities and money market instruments issued by the Government of Malta, and equities and corporate bonds issued and listed on the MSE.

    The Investment Manager may also invest directly or indirectly up to 15% of its assets in “Non- Maltese Assets”. The Investment Manager will maintain an exposure to local debt securities of at least 55% of the value of the Net Assets of the Fund.

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

     

  • Investor profile

    A typical investor in the Malta High Income Fund would be to one who is seeking to gain exposure to the local Government Bond Market and the local corporate bond and local equity markets, either by achieving capital growth and accumulation of wealth via the Accumulation Share Class, or by receiving periodical distributions which the Malta High Income Fund benefits from time to time via the Distribution Share Class.

    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

    • The Investment Manager will, at all times, maintain a direct exposure to local debt securities (issued or guaranteed by the Government of Malta and/or issued and listed on the Malta Stock Exchange) of at least 55% of the value of the Net Assets of the Fund.
    • The Investment Manager may invest up to 10% of the net assets of the Fund in un-listed Maltese and/or Non-Maltese Assets rated B- or higher or in bonds determined to be of comparable quality by the Investment Manager
    • The Fund may also invest in term deposits held with Banks regulated in Malta and other EU, EEA and OECD Member States
    • This Fund shall not invest, in the aggregate, more than 10% of the Net Assets of the Fund in units or shares of other UCITS or other CISs
  • Commentary

    April 2024

    Introduction

    The narrative for credit markets underwent a dramatic shift in April.  Previously anticipating a dovish pivot from the Federal Reserve (Fed), investors were caught off guard by hotter-than-expected inflation data and a first quarter US GDP print that while weak on first-glance, showed resilient private demand. The former reignited concerns about persistent inflation and pushed back expectations for interest rate cuts. The consequence was a swift and significant rise in bond yields, particularly at the belly and longer-end of the maturity spectrum.

    This repricing of interest rate expectations had a negative impact on bond prices with a broad sell-off felt across various segments. Generally, government debt and bonds most sensitive to fluctuations in benchmark yields, experienced steeper losses compared with corporate high yield bonds. Propelled by a high correlation, the repricing extended beyond the US with developed market credit in Europe also witnessing yield increases, albeit to a lesser extent. The policy direction in Europe now starkly differs, with the ECB – in its April meeting – laying the groundwork for a potential rate cut in June, acknowledging the disinflationary trend observed in the eurozone. However, the ECB maintained a cautious tone, emphasizing a data-dependent approach. Their monetary policy statement explicitly avoided pre-committing to a specific rate path. This underscores the ECB’s desire to retain flexibility in the face of evolving economic data and the ongoing situation in the global economy.

    Market environment and performance

    The Eurozone economy continues to present a picture of continued, albeit moderating, recovery. the eurozone economy grew in Q1 with GDP expanding by 0.3% QoQ, following the -0.1% decline in Q4 2023. The German economy rebounded with 0.2% growth after a -0.5% decline in Q4.

    Indeed, the Euro area economy moved closer to stabilization in April, Purchasing Managers’ Index (PMI) survey showed, amid a convincing recovery in services (reading 53.3 v 51.5), offsetting the deteriorating manufacturing segment (reading 45.7 v 46.1). Evidence of a two-speed economy. Overall, increased sales supported greater business activity in April. New orders placed with private sector firms in the eurozone rose for the first time since May 2023, albeit only marginally, as a steeper fall in demand for goods partially offset greater new business at services companies. Consequently, employment growth was the sharpest since mid-2023. On the price front, the survey signaled stronger inflationary pressures, with increases observed in both input costs and output charges.

    Inflation, a key concern for policy makers, continued to ease. While, headline HICP inflation remained steady at 2.4% YoY in April, in-line with expectations, core prices which exclude volatile food and energy prices, cooled to 2.7% – a 9th successive decline.

    The ECB Governing Council, in its April meeting, held the main refinancing operations rate steady at 4.5%, yet opening up the possibility of reducing the level of policy restriction, if the ECB becomes more confident that inflation is moving steadily toward the 2% target. President Lagarde acknowledged that inflation has continued to decline, with most measures of underlying inflation and wage growth easing.

    Fund performance

    In April, the Malta High Income Fund registered a loss of 0.16% for the month, underperforming its internally compared benchmark which saw 0.52% gain, aided by its exposure to locally listed equities which performed fairly well in contrast to the fixed income space.

    Market and investment outlook

    The local market, alienated from global factors such as rising yields and reversal in expectations, have in April performed well, outperforming other developed markets. The economy too, alike other southern European nations, continues to exceed expectations noting a substantially higher GDP growth rate for the full year 2023 (4.3%) compared to a 0.4% growth in the Euro area, lagged by the bloc’s largest economies which have thus far struggled to turn the corner. Unemployment rate meanwhile revolves at historical lows, below 3%. From a pricing stand point, inflationary pressures eased to a 27-month low of 2.7%. The outlook remains upbeat amid expectations of lower interest rates, a moderating cost of living squeeze and signs of recovering household and corporate demand. That said, optimism for the year ahead remains.

    From an investment management perspective, the managers seek to continue increasing the fund’s exposure to foreign names as they aim to achieve a dual benefit: improved portfolio performance and enhanced liquidity; an element which the local market currently does not offer and which have markedly worsened following the recent influx of local bond offerings. As new bonds, justifiably, reflect current market conditions in terms of yield offered, they’ve created a disruptive cycle. One whereby market participants chase the new higher-yielding bonds at the expense of low coupon issues which struggle to recover on the back of an active primary market. Ultimately, impacting overall performance of secondary market issues.

  • 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*

    -2.31%

    *View Performance History below
    Inception Date: 10 Apr 2018
    ISIN: MT7000022281
    Bloomberg Ticker: CCMIFAB MV
    Distribution Yield (%): 4.00
    Underlying Yield (%): 2.88
    Distribution: 30/04 & 31/10
    Total Net Assets: €19.93
    Month end NAV in EUR: 84.39
    Number of Holdings: 76
    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

    Amundi Euro Govt. Bond 10-15Y
    4.2%
    PG plc
    3.8%
    4% Central Business Centres 2033
    3.4%
    3.9% Browns Pharma 2031
    3.0%
    Harvest Technology plc
    3.0%
    3.5% GO plc 2031
    3.0%
    4.35% SD Finance plc 2027
    2.8%
    4.65% Smartcare Finance plc 2031
    2.7%
    GO plc
    2.6%
    3.75% Tum Finance plc 2029
    2.5%

    Top Holdings by Country*

    Malta
    90.9%
    Other
    9.1%
    *including exposures to CIS and Cash

    Major Sector Breakdown*

    Financials
    51.7%
    Consumer Staples
    11.7%
    Consumer Discretionary
    11.3%
    Asset 7
    Communications
    7.9%
    Funds
    6.2%
    Information Technology
    4.2%
    *including exposures to CIS

    Asset Allocation*

    Cash 0.7%
    Bonds 76.4%
    Equities 22.8%
    * including exposures to CIS

    Maturity Buckets*

    33.8%
    0-5 Years
    35.7%
    5-10 Years
    0.8%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    1 Year

    1.00%

    3 Year

    -3.66%

    5 Year

    -2.31%

    *The Distributor Share Class (Class B) was launched on 10 April 2018
    ** Performance figures are calculated using the Value Added Monthly Index "VAMI" principle. The VAMI calculates the total return gained by an investor from reinvestment of any dividends and additional interest gained through compounding. 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.
    *** Returns quoted net of TER. Entry and exit charges may reduce returns for investors.

    Currency Allocation

    Euro 100%
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