Fund declines in last quarter

Barbados’ largest mutual fund managers says one of its funds has dropped by 20 per cent drop and it is blaming the situation on the turmoil created by the novel coronavirus (COVID-19) pandemic.

Fortress Fund Managers, reporting on its Caribbean Growth Fund for the first quarter ending March 31, has told investors, “As most bond prices in the portfolio declined, the Fund experienced a rare period of negative return.”

This particular fund has 61 per cent of its investments in the international market, 18 per cent in Barbados and nine per cent in Jamaica. And according to the latest report, the fund’s Caribbean investments performed just as poorly as those on the international market during the quarter.

“The price of nearly every asset in the world fell substantially, and only stabilized as enormous government spending and central bank programmes were introduced in the largest economies.

“By the end of March, the main index of US stocks had fallen 20 percent from the start of the year . . . . These moves impacted approximately two thirds of the fund’s portfolio invested in global markets. Caribbean stocks fared little better with economies exposed to tourism and energy, two of the hardest hit industries. Jamaica fell 31 per cent and Trinidad lost 10 per cent,” the Fortress investors, who have $427 million in assets in the Caribbean Growth Fund, were told.

Addressing the way forward, the Bridgetown-based mutual fund company had a more positive forecast for its investors noting, “Healing of the markets continues, we expect the Fund to earn higher yields with additional gains from price improvements”.

Reporting on its Caribbean High Interest Fund where most investments are in longer term bonds, there was a 3.4 per cent decline. The net assets of that fund were $128 million at the end of the first quarter.

“The portfolio is a mix of Barbados dollar bonds and global issues held both directly and via the Fortress Fixed Income Fund and specialist managers . . . . With the Government of Barbados currently rated at “B-“, the system here is far from risk-free. We therefore expect that the value of all bonds in Barbados declined at least somewhat during the turmoil of the quarter,” Fortress Fund Managers disclosed in its report.