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

January 2024

Introduction

Market participants, though wary of possible threats to inflation – notably; sticky services inflation, a resilient labour market, and tensions in the Red Sea – remained confident that central banks had finished hiking, sustaining expectations of pre-emptive interest rate cuts. However, the first monetary policy meeting for 2024 dashed such hopes, providing a clear view that cuts may not come as soon as expected. Prior projections suggesting three cuts over 2024 were maintained by policy makers.

The ECB, in its January meeting, maintained record-high interest rates and pledged to keep them restrictive until inflation reaches its 2% target, despite concerns about a looming recession and easing price pressures. President Lagarde noted that officials unanimously concurred that it was premature to engage in discussions regarding interest rate cuts.

In January, German Bunds saw yields rise above 2.30%, yet retreated back to 2.17% at month-end. In the Eurozone periphery, the risk premium on Italian bonds relative to German securities reached a low of 1.56%.

Market environment and performance

A mild deceleration in Q3 together with weaker private sector activity, pointed to a possible contraction in December, reinforcing the likelihood of the euro area entering a technical recession in the latter half of the 2023. Unexpectedly, Euro Area economy stalled amid a better-than-expected growth in Spain and Italy while the French economy stalled and Germany contracted 0.3%.

Tentative signs of improvement in the Euro area economy were seen at the start of the year, January’s Purchasing Managers’ Index (PMI) survey showed, amid an improvement in manufacturing (reading 46.6 v a previous month reading of 44.4) and slowdown in services (reading 48.4 v a previous month reading of 48.8). Indeed, the contraction in business activity and new orders softened, while growth expectations strengthened to a nine-month high. Employment, previously contracting, showed signs of stabilization, while export demand fell at its slowest pace since last April. Persistent inflationary pressures remained apparent, particularly for prices charged by firms for goods and services. Both output prices and input costs rose at their sharpest rates for eight months.

Inflationary pressures returned to a downward trajectory following an uptick in inflation in December. Core prices – which exclude volatile food and energy prices – too eased to 3.3%, above forecasts of 3.2% but still reaching its lowest level since March 2022.

Fund performance

In January, the Malta High Income Fund registered a loss of 0.91% for the month, briefly underperforming its internally compared benchmark which saw 0.84% loss. Such underperformance to the benchmark was predominantly due to the notable decline in market value of Harvest Technology Group.

Market and investment outlook

Hopes for a rapid end to interest rate hikes faded in January 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*

-1.09%

*View Performance History below
Inception Date: 10 Apr 2018
ISIN: MT7000022281
Bloomberg Ticker: CCMIFAB MV
Distribution Yield (%): 4.00
Underlying Yield (%): 2.79
Distribution: 30/04 & 31/10
Total Net Assets: €20.42
Month end NAV in EUR: 85.58
Number of Holdings: 79
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
4.6%
PG plc
4.0%
4% Central Business Centres 2033
3.2%
3.9% Browns Pharma 2031
2.9%
3.5% GO plc 2031
2.8%
4.65% Smartcare Finance plc 2031
2.7%
4.35% SD Finance plc 2027
2.7%
GO plc
2.6%
RS2 Software plc
2.6%
3.75% Tum Finance plc 2029
2.4%

Major Sector Breakdown*

Financials
49.4%
Consumer Staples
12.0%
Consumer Discretionary
11.5%
Asset 7
Communications
8.5%
Funds
7.6%
Information Technology
4.1%
*including exposures to CIS

Maturity Buckets*

26.6%
0-5 Years
41.0%
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
88.4%
Other
11.6%
*including exposures to CIS and Cash

Asset Allocation*

Cash 0.7%
Bonds 75.3%
Equities 24.0%
* including exposures to CIS

Performance History (EUR)*

1 Year

0.56%

3 Year

-2.87%

5 Year

-1.09%

*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

    January 2024

    Introduction

    Market participants, though wary of possible threats to inflation – notably; sticky services inflation, a resilient labour market, and tensions in the Red Sea – remained confident that central banks had finished hiking, sustaining expectations of pre-emptive interest rate cuts. However, the first monetary policy meeting for 2024 dashed such hopes, providing a clear view that cuts may not come as soon as expected. Prior projections suggesting three cuts over 2024 were maintained by policy makers.

    The ECB, in its January meeting, maintained record-high interest rates and pledged to keep them restrictive until inflation reaches its 2% target, despite concerns about a looming recession and easing price pressures. President Lagarde noted that officials unanimously concurred that it was premature to engage in discussions regarding interest rate cuts.

    In January, German Bunds saw yields rise above 2.30%, yet retreated back to 2.17% at month-end. In the Eurozone periphery, the risk premium on Italian bonds relative to German securities reached a low of 1.56%.

    Market environment and performance

    A mild deceleration in Q3 together with weaker private sector activity, pointed to a possible contraction in December, reinforcing the likelihood of the euro area entering a technical recession in the latter half of the 2023. Unexpectedly, Euro Area economy stalled amid a better-than-expected growth in Spain and Italy while the French economy stalled and Germany contracted 0.3%.

    Tentative signs of improvement in the Euro area economy were seen at the start of the year, January’s Purchasing Managers’ Index (PMI) survey showed, amid an improvement in manufacturing (reading 46.6 v a previous month reading of 44.4) and slowdown in services (reading 48.4 v a previous month reading of 48.8). Indeed, the contraction in business activity and new orders softened, while growth expectations strengthened to a nine-month high. Employment, previously contracting, showed signs of stabilization, while export demand fell at its slowest pace since last April. Persistent inflationary pressures remained apparent, particularly for prices charged by firms for goods and services. Both output prices and input costs rose at their sharpest rates for eight months.

    Inflationary pressures returned to a downward trajectory following an uptick in inflation in December. Core prices – which exclude volatile food and energy prices – too eased to 3.3%, above forecasts of 3.2% but still reaching its lowest level since March 2022.

    Fund performance

    In January, the Malta High Income Fund registered a loss of 0.91% for the month, briefly underperforming its internally compared benchmark which saw 0.84% loss. Such underperformance to the benchmark was predominantly due to the notable decline in market value of Harvest Technology Group.

    Market and investment outlook

    Hopes for a rapid end to interest rate hikes faded in January 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*

    -1.09%

    *View Performance History below
    Inception Date: 10 Apr 2018
    ISIN: MT7000022281
    Bloomberg Ticker: CCMIFAB MV
    Distribution Yield (%): 4.00
    Underlying Yield (%): 2.79
    Distribution: 30/04 & 31/10
    Total Net Assets: €20.42
    Month end NAV in EUR: 85.58
    Number of Holdings: 79
    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
    4.6%
    PG plc
    4.0%
    4% Central Business Centres 2033
    3.2%
    3.9% Browns Pharma 2031
    2.9%
    3.5% GO plc 2031
    2.8%
    4.65% Smartcare Finance plc 2031
    2.7%
    4.35% SD Finance plc 2027
    2.7%
    GO plc
    2.6%
    RS2 Software plc
    2.6%
    3.75% Tum Finance plc 2029
    2.4%

    Top Holdings by Country*

    Malta
    88.4%
    Other
    11.6%
    *including exposures to CIS and Cash

    Major Sector Breakdown*

    Financials
    49.4%
    Consumer Staples
    12.0%
    Consumer Discretionary
    11.5%
    Asset 7
    Communications
    8.5%
    Funds
    7.6%
    Information Technology
    4.1%
    *including exposures to CIS

    Asset Allocation*

    Cash 0.7%
    Bonds 75.3%
    Equities 24.0%
    * including exposures to CIS

    Maturity Buckets*

    26.6%
    0-5 Years
    41.0%
    5-10 Years
    0.8%
    10 Years+
    *based on the Next Call Date

    Performance History (EUR)*

    1 Year

    0.56%

    3 Year

    -2.87%

    5 Year

    -1.09%

    *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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