Federated Project and Trade Finance Tender Fund XPTFX

Product Type Asset Class Category
Closed-End Fund Alternative Trade Finance
As of 09-30-2017

Market Overview

The volume of global trade continued to rise in the third quarter of 2017. The World Trade Organization now forecasts that global trade will grow by 3.6% for the year.  The stronger-than-expected growth is being driven by Asia and North America where import demand is recovering from results in 2016.  Asian flows were the most dramatic as intra-regional shipments picked up and due to greater import demand from North America.  Developed economies exports were up 3.1% over the same period last year while those of developing economies surged 5.9%.

At the end of the quarter, the largest regional allocation was to Sub-Saharan Africa at 24.78%, which also was the region with the highest coupon at 4.91%. Among regions, Sub-Saharan Africa was the largest contributor to the fund’s total return for the quarter. The region with the greatest change quarter-over-quarter was Asia, which saw an increase of 5.39%.

At the end of the third quarter of 2017, the fund’s 20.55% allocation to the Energy sector represented its largest sector allocation as well as its largest sector increase, which was 2.57%. Energy was also the sector that contributed most to the fund’s total return for the quarter.

Looking Ahead

The fund’s asset allocation reflects the dynamics noted above.  Attractive opportunities are available in the regions with the fastest trade growth.  Allocations to Asia, Middle East and Northern Africa, and Sub Saharan Africa may continue to be increased.  Libor rates have held steady through the quarter with further increases expected as the Federal Reserve gradually enters a tightening mode.