Tuesday, April 23, 2024

Cautious approach to investing in the Caribbean


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The operators of a group of investment funds based in Barbados are approaching investments in the Caribbean cautiously.

Reporting on the performance of its Caribbean Growth Fund and Caribbean High Interest Fund, Fortress Fund Managers said difficult financial economic conditions were persisting in and out of the Caribbean and hence it had to tread carefully.

In the cases of the Caribbean Growth Fund, Fortress said it “declined 0.5 per cent during the third quarter of 2014 and has returned 3.3 per cent over the last year”, adding that “net assets of the fund were $361 million, up $23 million from this time last year”.

However, it also said: “We continue to invest very selectively in the Caribbean region, as corporate and economic performance can vary widely, as can stock valuations. We recently visited Jamaica, where an [International Monetary Fund] programme has been ongoing for a number of years, and where shares trade at a fraction of the prices being paid in a market like Trinidad.

“We met with a number of companies whose business operations continue to perform in spite of the economic difficulties. The conditions are not easy, but we are finding enough value there in some cases to compensate for the risks, especially on the currency side.

“Overall, we continue to invest cautiously in the Caribbean and internationally. While we do see above average risks in some markets and sectors, we also continue to find a range of well-priced shares where reasonable value is suggesting good potential for long term returns. The portfolio remains well diversified geographically,” the company added.

The same caution was being shown with the Caribbean High Interest Fund, which although recently having a decline in cash “is still above where we would like it to be given the low rates being paid on deposits”.

“We are working to find more good investments to make in Barbados. We also continue to monitor the government fiscal situation in the Caribbean very carefully, and believe that the risks of owning long term government debt remain substantial,” Fortress said.

“Government finances are not improving, and we believe the prices of bonds still do not reflect the very substantial risks. As a result, the fund’s exposure to this area remains minimal. The gross average yield to maturity of the portfolio is just over four per cent, and the portfolio continues to be well diversified by issuer, sector, and, as much as possible, by geography.” (SC)


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