BRIDGETOWN, Barbados, Thursday August 9, 2018 – Investments managed by Fortress Fund Managers have recorded an increase over the same period last year, even though regional and international events led to a small decline for the second quarter of 2018.
According to the recently released Fortress Fund Managers June 2018 Quarterly Report, which focused on the Caribbean Growth Fund, the Caribbean High Interest Fund and the Caribbean Pension Fund, the Funds were “still in positive territory over the last year” in spite of the rise in interest rates in the United States, an increase in global trade tensions, and financial stress in some Caribbean countries.
The report also addressed the government of Barbados’ bond restructuring announcement in June which aims to reduce government’s debt burden by correspondingly reducing the value of investors’ bond holdings. Noting that Fortress was “encouraged by the open and clear approach being taken by the government so far”, the report reminded investors that the Fund had little or no exposure to government of Barbados bonds in recent years because the risks were too high.
“This means the restructuring of existing debt has not affected the funds’ results substantially, nor do we expect it to,” it stated.
Net assets of the Caribbean Growth Fund were $460 million at June 30 2018, up from $440 million this time last year. While this Fund had recent gains in Jamaica, fiscal stress in Barbados and Trinidad meant that it ended the quarter with mixed results. The Fund was also affected by rising interest rates in the United States.
The Caribbean High Interest Fund was similarly affected by rising interest rates in the United States, however the minimal losses recorded for the quarter did not have an overall negative effect on the Fund. The Net Asset Value (NAV) of the Fund’s accumulation share finished June 30 at $1.9571, while the distribution share finished at $0.9946. Net assets were $133 million, up from $125 million this time last year. The report projects that the rising rates will continue to increase expected returns going forward.
The three classes of shares in the Caribbean Pension Fund are up between 0.9 per cent and 4.7 per cent over the past year. The report assured investors that Barbados’ debt restructuring programme would not adversely affect the Fund, but re-emphasized the need to save for retirement, particularly since much of Barbados’ debt is held by the National Insurance Scheme (NIS).
“Each of us is either receiving a pension from the NIS or hopes to at some point in the future. To the extent that value is extracted from the NIS during the bond restructuring exercise to reduce Government’s debt burden, one of two things will need to happen: 1) the burden on future taxpayers to fund current NIS promises will rise; or 2) the NIS promises will need to be reduced. Unfortunately, there is not a happy way around this one. Today’s stresses mean NIS will almost certainly have a harder time keeping its current promises and that’s something we should all bear in mind in planning for the future,” the report cautioned.
Fortress manages more than $650 million across 11 different funds with regional and global investments.