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Merill Funds 2021 Q2 Commentary
Merill SICAV - 3.08.2021

Merill Funds Update: April to June 2021


Quarterly markets review:

The second quarter of the year saw global equity markets maintain the positive momentum garnered during the first quarter for the calendar year. Whereas bond markets saw US 10-year yields fall as Europeans ones rose.

US equity market kept on reaching for new highs, marked by the S&P 500 reaching an all top high in June notwithstanding the Federal Reserve’s subtly hinting a slightly more hawkish stance from 2023. The positive economic sentiment drove the US composite purchasing managers’ index (PMI) to 63.9 in June. The PMI indices, produced by IHS Markit, are based on survey data from companies in the manufacturing and services sectors. Given such a positive outlook, the worry of inflation spikes was on the mind of market participants particularly as most global economies strove to vaccinate their citizens with the goal of comprehensively and permanently reopening up.

Economies in the Eurozone experienced a strong rebound on the back of strong corporate earnings and an increasingly successful vaccination rollout which is buoying hopes of greater economic activity. Following a global trend, European Information Technology companies have experienced significant gains mostly as a result of technology making further inroads into consumers’ lives during the pandemic. The European PMI has mostly mirrored the gains of its US counterpart. The first disbursements from the €800 billion Next Generation EU fund have been affected following approval of national spending plans.

Globally, investment grade and high yield bonds have performed well over the period, outpacing Government bonds. Investment grade bonds got a boost from falling yields whilst high yield bonds benefited from the economic recovery and positive fundamentals.


Merill Total Return Income Fund
 

Share Class                                             30/06/2021                 30/03/2021
Accumulator (EUR)                                     0.5708                         0.5613
Distributor (EUR)                                         0.5314                         0.5240

As at 30 June 2021, the fund had €40.91 million in assets under management. The fund generated a good performance backed by markets, which maintained a positive momentum. The equity portion produced the lion’s share of the positive return. As opposed to the previous quarter, the investment grade bonds also contributed to the positive performance. We retained an underweight position in government bonds, which so far is producing the desired results. Once again, the characteristics of this fund highlight the importance of diversification and mixed allocation between bonds and equities.
 

Merill High Income Fund
 

Share Class                                             30/06/2021                 30/03/2021
Accumulator (EUR)                                      0.5352                        0.5253
Distributor (EUR)                                          0.4681                        0.4633
GBP Hedged Distributor (GBP)                    0.5088                        0.5036

As at 30 June 2021, the fund had €61.28 million assets under management. At the beginning of this quarter, we have shifted further into equity and high yield debt by reducing some of our exposure in investment grade bonds. The Fund’s underlying equity exposure produced the lion's share of the positive return. The debt allocation also produced positive results especially since, we have evidenced a marked improvement in sovereign bonds denominated in exotic currencies.


Merill Global Equity Income Fund
 

Share Class                                             30/06/2021                 30/03/2021
Accumulator (EUR)                                      0.6026                         0.5791
Distributor (EUR)                                          0.5859                         0.5642

As at 30 June 2021, the fund had €17.29 million assets under management. The fund had another healthy positive quarter. Most of the sectors ended in positive territory apart from some defensive sectors such as utilities. The main two sectors contributing to the upside were energy and info tech companies. During this quarter we continued to add in selective equities namely in industries that retain an edge in such an environment.


Merill Strategic Balanced Fund


Share Class                                             30/06/2021                 30/03/2021
Accumulator (USD)                                     1.0379                         1.0095

As at 30 June 2021, the fund had $29.84 million assets under management. The fund generated a positive return over the quarter. During this quarter, we continued to add to our equity exposure and to the high yield bond allocation. All asset classes within the fund generated a positive return, with the equity allocation remaining the best performer. The info tech within the equity allocation contributed the most due to a fall in yields followed by materials. The fall in yields also contributed to the upside of our debt allocation with both investment grade and high yield registering healthy gains.
 

This document is issued by Jesmond Mizzi Financial Advisors Limited (JMFA) as Managers of Merill SICAV plc. JMFA (IS30176) of 67, Level 3, South street, Valletta, VLT 1105 is licensed to conduct investment services business under the Investments Services Act by the MFSA of Triq l-Imdina, Zone 1, Central Business District, Birkirkara, Malta and is a member firm of the Malta Stock Exchange. Merill SICAV plc is incorporated and licenced as an open ended collective investment scheme, registered in Malta, qualifying as a Maltese UCITS with effect from the 16th October 2015. This document does not intend to give investment advice and the contents therein should not be construed as such. The directors or related parties, including the company, and their clients are likely to have an interest in securities mentioned in this document. Past performance is no guide to future performance and the value of investments may fall as well as rise.


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