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.
A quick introduction to our Malta Government Bond 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
Bonds
MIN. INITIAL INVESTMENT
€2500
FUND TYPE
UCITS
BASE CURRENCY
EUR
5 year performance*
-8.02%
*View Performance History below
Inception Date: 21 Apr 2017
ISIN: MT7000017992
Bloomberg Ticker: CCMGBFA MV
Distribution Yield (%): N/A
Underlying Yield (%): 3.20
Distribution: N/A
Total Net Assets: €31.77 mn
Month end NAV in EUR: 94.38
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
9.5%
8.6%
7.9%
5.5%
4.0%
3.9%
3.6%
3.4%
3.2%
3.1%
Maturity Buckets*
Risk & Reward Profile
Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top Holdings by Country*
80.4%
2.6%
2.1%
1.4%
1.1%
1.0%
0.8%
0.7%
0.7%
0.7%
Asset Allocation
Performance History (EUR)*
1 Year
2.55%
3 Year
-13.12%
5 Year
-8.02%
Currency Allocation
Interested in this product?
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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.
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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
March 2024
Introduction
The first quarter of 2024 defied some pre-existing expectations of a pronounced economic slowdown. Equity markets displayed continued strength, with the S&P 500 closing at a record high early in the period. However, credit markets experienced intermittent bouts of volatility, highlighting the inherent disconnect in risk pricing between asset classes. Notwithstanding headwinds faced, credit markets delivered positive returns, overall.
From a macroeconomic perspective, data remained generally supportive, proving particularly kind for central banks as developed economies maintained a positive growth momentum, avoiding a steeper downturn. Inflation, though persistent, showed nascent signs of peaking. The labour market, previously characterized by tightness, exhibited signs of easing, with wage growth decelerating. Economic activity continued at a healthy pace, albeit with some regional variations. European economies witnessed a near-stabilization of activity, with the tentative signs of a recovery observed at the start of the year carrying over. The pace however remains uncertain as the bloc’s largest economies struggled to turn the corner.
Market environment and performance
The Eurozone economy in March 2024 presented a picture of continued, albeit moderating, recovery. Eurostat’s preliminary estimates indicate Q1 2024 growth of 0.3% QoQ, a slight deceleration from the previous quarter’s 0.5% QoQ growth.
Indeed, the Euro area economy moved closer to stabilization in March, Purchasing Managers’ Index (PMI) survey showed, amid a modest recovery in services (reading 51.1 v 50.2), largely offsetting the weakening manufacturing segment (reading 45.7 v 46.5). Overall, new orders declined at the slowest rate in ten months, and backlogs of work were depleted at the weakest rate in nine months, while employment saw modest growth. On the price front, input cost inflation slowed to a three-month low, and selling price inflation cooled for the first time in five months. Finally, business confidence improved to its strongest level in a year.
Inflation, a key concern for policy makers, eased. Headline HICP inflation declined to 2.4% year-on-year in March, below expectations and down marginally from February’s 2.6%. The core rate, excluding volatile food and energy prices, also cooled to 2.9%, below forecasts and its lowest point since February 2022. Meanwhile, the Eurozone labor market displayed continued strength with unemployment rate (6.5%) holding steady near historical lows. However, the absence of wage growth data limits a full assessment of its inflationary impact.
The ECB Governing Council, in its March meeting, held the main refinancing operations rate steady at 4.5%, committing to a data-dependent approach to determine the appropriate level and duration of restriction. President Lagarde acknowledged a lack of clear conviction within the Council, indicating a need for “more evidence, more data”. Additionally, Lagarde remarks that governing council “will know a little more in April, but we will know a lot more in June”.
Fund performance
In March, the CC Malta Government Bond Fund experienced a gain of 1.60%, outperforming its internally compared benchmark which recorded 1.47% gain, and aligned with the tightening 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 Q1 as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation. Despite reaching peak levels and inflation sustaining a downward trend, Fed Chair Jerome Powell stated that rate cuts in March were unlikely. Similarly, while acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were as yet premature. A divergent tone was observed in the March’s meeting, with policy makers hinting at possible easing in June as data converges towards targets. The key challenge for policy makers currently is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterparts, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting a gathering upturn in the rest of the eurozone, pointing to an uneven economic picture.
Fixed income, for years losing its appeal – given the relatively low-yielding environment – has become more attractive. Indeed, locking in coupons at such comparably favorable levels, ahead of any policy easing, is key.
That said, the manager will going forward continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration in a gradual manner. Optimism for the year ahead remains on the back of continued rate cut expectations.
-
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*
-8.02%
*View Performance History below
Inception Date: 21 Apr 2017
ISIN: MT7000017992
Bloomberg Ticker: CCMGBFA MV
Distribution Yield (%): N/A
Underlying Yield (%): 3.20
Distribution: N/A
Total Net Assets: €31.77 mn
Month end NAV in EUR: 94.38
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
1234567Lower Risk
Potentialy Lower Reward
Higher Risk
Potentialy Higher Reward
Top 10 Holdings
1.00% MGS 20319.5%
4.50% MGS 20288.6%
5.25% MGS 20307.9%
4.45% MGS 20325.5%
4.00% MGS 20334.0%
4.30% MGS 20333.9%
5.20% MGS 20313.6%
5.10% MGS 20293.4%
3.95% MGS 20283.2%
2.30% MGS 20293.1%
Top Holdings by Country*
Malta80.4%
Germany2.6%
Belgium2.1%
Portugal1.4%
Spain1.1%
France1.0%
Romania0.8%
Slovenia0.7%
Poland0.7%
Hungary0.7%
*including exposures to CISAsset Allocation
Cash 4.9%Bonds 92.9%CIS/ETFs 2.2%Maturity Buckets*
16.7%0-5 Years58.4%5-10 Years17.7%10 Years+*based on the Next Call Date (also includes cash)Performance History (EUR)*
1 Year
2.55%
3 Year
-13.12%
5 Year
-8.02%
* 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% -
Downloads
Commentary
March 2024
Introduction
The first quarter of 2024 defied some pre-existing expectations of a pronounced economic slowdown. Equity markets displayed continued strength, with the S&P 500 closing at a record high early in the period. However, credit markets experienced intermittent bouts of volatility, highlighting the inherent disconnect in risk pricing between asset classes. Notwithstanding headwinds faced, credit markets delivered positive returns, overall.
From a macroeconomic perspective, data remained generally supportive, proving particularly kind for central banks as developed economies maintained a positive growth momentum, avoiding a steeper downturn. Inflation, though persistent, showed nascent signs of peaking. The labour market, previously characterized by tightness, exhibited signs of easing, with wage growth decelerating. Economic activity continued at a healthy pace, albeit with some regional variations. European economies witnessed a near-stabilization of activity, with the tentative signs of a recovery observed at the start of the year carrying over. The pace however remains uncertain as the bloc’s largest economies struggled to turn the corner.
Market environment and performance
The Eurozone economy in March 2024 presented a picture of continued, albeit moderating, recovery. Eurostat’s preliminary estimates indicate Q1 2024 growth of 0.3% QoQ, a slight deceleration from the previous quarter’s 0.5% QoQ growth.
Indeed, the Euro area economy moved closer to stabilization in March, Purchasing Managers’ Index (PMI) survey showed, amid a modest recovery in services (reading 51.1 v 50.2), largely offsetting the weakening manufacturing segment (reading 45.7 v 46.5). Overall, new orders declined at the slowest rate in ten months, and backlogs of work were depleted at the weakest rate in nine months, while employment saw modest growth. On the price front, input cost inflation slowed to a three-month low, and selling price inflation cooled for the first time in five months. Finally, business confidence improved to its strongest level in a year.
Inflation, a key concern for policy makers, eased. Headline HICP inflation declined to 2.4% year-on-year in March, below expectations and down marginally from February’s 2.6%. The core rate, excluding volatile food and energy prices, also cooled to 2.9%, below forecasts and its lowest point since February 2022. Meanwhile, the Eurozone labor market displayed continued strength with unemployment rate (6.5%) holding steady near historical lows. However, the absence of wage growth data limits a full assessment of its inflationary impact.
The ECB Governing Council, in its March meeting, held the main refinancing operations rate steady at 4.5%, committing to a data-dependent approach to determine the appropriate level and duration of restriction. President Lagarde acknowledged a lack of clear conviction within the Council, indicating a need for “more evidence, more data”. Additionally, Lagarde remarks that governing council “will know a little more in April, but we will know a lot more in June”.
Fund performance
In March, the CC Malta Government Bond Fund experienced a gain of 1.60%, outperforming its internally compared benchmark which recorded 1.47% gain, and aligned with the tightening 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 Q1 as central bankers reiterated their commitment to data-driven policy decisions and emphasized the continued threat of inflation. Despite reaching peak levels and inflation sustaining a downward trend, Fed Chair Jerome Powell stated that rate cuts in March were unlikely. Similarly, while acknowledging progress in “disinflation,” ECB President Christine Lagarde stressed that discussions of easing policy were as yet premature. A divergent tone was observed in the March’s meeting, with policy makers hinting at possible easing in June as data converges towards targets. The key challenge for policy makers currently is balancing continued high interest rates with supporting economic growth. The euro area, unlike its Western counterparts, faces an additional headwind whereby key economies, traditionally bolstering the single currency bloc, are now dragging down and offsetting a gathering upturn in the rest of the eurozone, pointing to an uneven economic picture.
Fixed income, for years losing its appeal – given the relatively low-yielding environment – has become more attractive. Indeed, locking in coupons at such comparably favorable levels, ahead of any policy easing, is key.
That said, the manager will going forward continue to assess the market landscape and capitalize on appealing credit opportunities. Consistent with recent actions, the manager will continue to tailor the portfolio to match prevailing yield conditions while increasing the portfolio’s overall duration in a gradual manner. Optimism for the year ahead remains on the back of continued rate cut expectations.