Despite posting a strong finish last year and forecasting a positive 2018, a local investment management firm is concerned that Barbados’ ongoing economic challenges could contribute to lower returns this year, when compared to 2017.
Chief Investment Officer of Fortress Advisory & Investment Services Peter Arender said he believes this year’s projected success would be achieved through “its policy of disciplined value investing and achieving profit growth for its individual and organizational investors”.
However, he said while equity investments were on stream to realize a positive year in 2018, the results would probably be less than last year when returns were “superb” in many areas, including their flagship Fortress Caribbean Growth Fund’s 14 per cent increase.
“Profit growth remains good in many regions and it is still possible to find many attractively valued stocks. We value investors and are always looking to maximize benefits for our investors relative to what we are paying,” Arender said while cautioning that limited options in the Barbados capital market may still pose a challenge for investors since generally, “the lack of such options leads to either high risk of loss or lower returns”.
He pointed out that either way, pension plan sponsors and participants would need to continue adjusting to the implications of lower returns in the short term.
“Investors will continue to sign up for monthly plans as this is the best way to save steadily for the future. Studies have demonstrated the validity of regular automatic saving and today’s systems, including those of Fortress, help to encourage this good investment behaviour. We see more of this happening in 2018 and, indeed, recommend it highly,” he said.
“2017 was a good year with record-breaking growth in several of our range of funds. As for 2018, despite the challenges economically in Barbados, the region and in other parts of the world, it is still possible to find attractively valued stocks and this is where Fortress’ focus will continue in order to generate good returns for our current and prospective investors into the future,” he said.
Arender also revealed that in response to the need for viable alternatives to low interest rates offered by commercial banks, Fortress had launched its Fortress Fixed Income Fund late last year. This, he explained, was done to offer easy access to a high-quality bond portfolio at low cost for US dollar-based investors.
The chief investment officer said he expected that in the global equity markets, international and emerging markets stocks would outperform those in the US for the second year in a row.
“The Fortress Emerging Markets Fund was able to take advantage of this and was up 27 per cent in 2017 when, after three years of recession, growth resumed in emerging markets and we expect more to come. This is a positive sign for our investors,” Arender said.
Fortress manages more than BDS$650 million across 13 different funds with regional and global investments.