Taking local, regional and international bond markets have hit the island’s largest mutual fund, causing it to eliminate its traditional second half-year shareholder dividend.
In a recent letter to shareholders, Fortress Fund Managers said it regretted to inform them that “it was not possible for the directors to declare a dividend on the Fortress Caribbean High Interest Fund distribution shares” for the six-month period ended September 30, 2011.
According to the correspondence, the Caribbean High Interest Fund earned 2.3 per cent over the six months ended March 30, 2011, resulting in a dividend of $0.023 per share at the end of May.
However, Fortress said: “Due to extreme weakness in global and Caribbean financial markets over August and September, though, the fund did not show any further net gain between March and September. Declining bond values more than negated interest earnings during the period.”
When contacted Friday, Roger Cave, investment director with Fortress, told BARBADOS BUSINESS AUTHORITY what simply happened was “no more funds were earned in the second half to pay a dividend” on this particular fund that the company managed.
Noting that this was the first time in the nine-year history of the fund that it was unable to pay a second
half-year dividend, Cave blamed the poorly performing local, regional and international bond markets. He stressed that Fortress would continue to take a very conservative line with its investments, “favouring safety and short-term liquidity”.
According to Cave, “We are intentionally sacrificing return in favour of safety and short-term liquidity in order to protect our investments.”
At the same time, he stressed that the Fortress Caribbean High Interest Fund did achieve earnings in the first half but they were wiped out by declining bond values.
