THE ISLAND’S LARGEST MUTUAL FUND is treading very carefully when it comes to investments in Caribbean Government paper as the economic environment remains fluid.
And even though Fortress Fund Managers has 62 per cent of its Caribbean High Interest portfolio invested in Barbados – the bulk in Barbados Government Treasury Bills – Fortress has told stakeholders: “With the potential for a decline in global economic and profit growth, and still acute economic challenges in the Caribbean, we are being very selective in making new investments.”
In its June quarterly report, Fortress said while it had “significant room to invest in long-term Caribbean government bonds”, it would only do so when “the right combination of pricing and creditworthiness develops”.
Fortress Fund Managers pointed to the difficult investing environment that existed in Barbados and the region.
“With the notable exception of Trinidad, Caribbean markets have not enjoyed any of the strong returns that global markets have seen so far in 2013, and in recent years since the global financial crisis,” it said.
“The fund’s diversified investments in global markets have contributed much needed positive returns to offset the losses experienced in local markets during this difficult period for the region.”
Fortress manages $179.46 million in pension fund net assets, another $119.79 million in the Caribbean High Interest Fund, and $331.97 million in the Caribbean Growth Fund.
The company is chaired by businessman Geoffrey Cave while Roger Cave is the investment director.
The investment managers lamented that while the Trinidad market had been buoyant “the Jamaican market has some more appealing valuations, but the recent government debt restructuring programme and currency weakness (the Jamaica dollar now trades at $101 to US$1) could significantly affect results, even from current depressed prices”.
On the Barbados situation, Fortress said, “We continue to see downward pressure on company profits, and share prices are languishing as a result. Soon-to-be-announced Government spending cuts could put further pressure on earnings in the near term.”
The company told investors that it hoped the steps to be taken by the Barbados Government “will set the country on a more sustainable financial path and pave the way for a revival of profitable economic activity”.
It noted: “At the very least, we are encouraged that the very serious structural, fiscal and economic problems we face are now being acknowledged and discussed openly. Progress from here will not be easy, but it will benefit us all if we get it right.”
