After a difficult start to the year for some of its financial markets, Fortress Fund Managers is reporting healthy returns for the second quarter of the year.
And even as the fund manager stated that this was a time for optimism, it has reminded long-term investors that now was also time for “discernment and appropriate caution”.
This note of cautious optimism was struck in its June 2020 quarterly report shared recently with its investors.
“After a difficult start to the year, financial markets had a strong and very welcome recovery in the second quarter.
The Fortress funds posted healthy returns and have continued to advance in recent weeks,” the report shared in its summary.
It added that that Fortress’ scorecard for the year was “not yet positive overall” with the Caribbean Growth Fund showing a decline and the Caribbean High Interest Fund registering a small gain.
The June quarterly report focused on Fortress’ three Barbados dollar funds – the flagship Caribbean Growth Fund, the Caribbean High Interest Fund which focuses on income and capital preservation, and the Caribbean Pension Fund.
The Caribbean Growth Fund gained 7.5 per cent in the second quarter with global investments recovering significantly, led by large US technology companies, while Caribbean shares were mostly weaker. Overall, the fund is still down 8.9 per cent over the past year.
The net asset value (NAV) per share finished the quarter at $5.5812. Net assets of the Fund were $462 million, down from $484 million this time last year. The Fund’s annual compound rate of return since inception in 1996 is 7.6 per cent per year.
“The strong performance in the quarter was driven by the returns of the Fund’s global investments, while returns in Caribbean stock markets were mixed,” the report noted.
Regionally, Jamaica shares registered modest gains for the quarter while Trinidad shares declined marginally, and Barbados shares fared the worst.
“The Fund’s position in Goddard Enterprises was affected by the lack of commercial air travel due to COVID-19, as a significant portion of the company’s revenues is tied to commercial flights. The shares fell 9.2 per cent in the quarter. Sagicor Financial declined 17.9 per cent during the quarter,” it explained.
The Caribbean High Interest Fund gained 4.2 per cent in the second quarter and is up 2.5 per cent over the past year.
The net asset value (NAV) of the Fund’s Accumulation share finished at $2.0264, while the Distribution share finished at $1.0148. Net assets of the Fund were $134 million, down from $137 million this time last year. The Caribbean Interest Fund’s annual compound rate of return since inception in 2002 is 4.0 per cent per year.
Fortress noted that in Barbados it added to its holdings of Government bonds at discounts that corresponded to yields in the 7-10 per cent range and made new investments in short-term secured deposits in Barbados.
“These moves further reduced the cash position and increased the yield of the Fund,” the company said.
It said the strong recovery in financial markets after a weak start to the year redounded positively on the three classes of shares in the Caribbean Pension Fund. The three classes of shares of the Fund gained between 4.7 per cent and 6.8 per cent in the second quarter.
This indicates returns of between -5.8 per cent and + 0.6 per cent over the past year.
The report reminded investors of the importance of the portability of pensions in the event of job changes and presented varied options for doing so.