Fortress performs despite trying year

Fortress Fund Managers says it posted one of its strongest-ever performances in the fourth quarter of 2020 as world equity markets continued their recovery from a turbulent year.

The leading fund manager reported that its global equity investments led the way during the quarter, with bond portfolios also posting gains and finishing a strong 2020 for fixed income investments.

This assessment was shared recently with Fortress investors in its December 2020 quarterly report which focused on Fortress’ three Barbados dollar funds: the flagship Caribbean Growth Fund; the Caribbean High Interest Fund, which concentrates on income and capital preservation; and the Caribbean Pension Fund.

The Caribbean Growth Fund gained 11.3 per cent in the fourth quarter as the recovery in global equities strengthened after the US elections and positive vaccine news in November.

However, with these gains, the Fund was down 2.9 per cent over the past year as Caribbean shares are yet to see a meaningful recovery.

“The Fund’s global investments had one of their strongest quarters ever, continuing to reclaim ground from early in the year and in some cases to set new highs.

“As fear and uncertainty around the outcome of the US election passed, and more positive news on COVID-19 vaccines came out, stocks in the US and in major markets around the world surged,” the report explained.

It added that this “rally was wide and inclusive, driving prices higher in areas that had been overlooked through much of the year”.

The Fund’s largest allocations benefited from this, particularly the Fortress Emerging Markets Fund, which reached a new all-time high when it increased 26 per cent in the quarter.

The Fortress International Equity Fund was up 18 per cent, Caledonia Investments 24 per cent, benefiting also from a stronger British Pound, while the Templeton Asian Smaller Companies Fund increased by 21 per cent.

In its outlook, Fortress said it continued to see “good prospects ahead for the diversified mix of high-quality, well-valued shares in which the Fund invests”.

The Fund’s annual compound rate of return since inception in 1996 is 8.0 per cent per year.

The Caribbean High Interest Fund gained 2.3 per cent during the quarter under review, and was up 4.4 per cent over the past year as global corporate and emerging markets bonds “continued to post gains on economic optimism and ongoing central bank support”.

The report explained that “government bond yields rose slightly, with US Treasury 10-year yields moving from 0.7 per cent to 0.9 per cent”.

“Yields are still exceptionally low by historic standards and remain below the more ‘normal’ 1.9 per cent levels that prevailed before the pandemic and the huge monetary policy support it elicited from the US Federal Reserve. This Fed support remains largely in place,” the report added.

The report noted that in Barbados the fund manager “continued to chip away at longer-term Government of Barbados bonds in the secondary market where they are trading at double-digit yields.

These purchases kept the Fund’s government of Barbados weighting (12 per cent of total) relatively steady as the Series F bonds we acquired shortly after the restructuring continue to make scheduled principal repayments each month”.

The Fund’s annual compound rate of return since inception in 2002 is 4.1 per cent annually.

The three classes of shares of the Pension Fund gained between 3.8 per cent and 10.1 per cent in the fourth quarter and showed returns of between -0.6 per cent and 3.4 per cent over the past year.

The Aggressive Accumulator (AA) share returned 10.1 per cent, the Conservative Consolidator (CC) share posted 8.5 per cent and the Capital Secure (CS) share returned 3.8 per cent for the quarter.

The report added that “global equities had a strong quarter as vaccine approvals and the US elections raised hopes of a return to normal”.

Reminding investors to “buy low and sell high”, the report again urged them to stay the course despite current events.

Fortress Fund Managers manages approximately $700 million across 11 different funds with regional and global investments. (PR)