Three’s a charm – Royal Fidelity to bring third chance for Barbadian investors to boost their portfolios with TIGRS
Bajans have an opportunity to hold not just one but many TIGRS by the tale this month… TIGRS, an acronym for Total Index-Linked Global Returns Securities (TIGRS) are Royal Fidelity’s principal protected mutual funds of which two have already been issued in the Barbados market. Recently, Royal Fidelity’s Mutual Fund known as the fierce creature marked its first anniversary since closing last October.
Royal Fidelity will bring its third TIGRS to Barbados in November, this time with a focus on emerging markets where the company sees the greatest opportunity for returns. TIGRS A2 which closes on November 26 will be invested 60% in the MSCI Emerging Markets Index, 20% in the, S&P 500 and 20% in the MSCI EAFE Index ( Europe, Australasia, Far East).
“Emerging markets will drive the global recovery over the next decade and the companies in these indices are the key drivers of this growth” Charles Chambers, Managing Director of Royal Fidelity said. This theme is consistent with the thought processes expressed by Merrill Lynch Global Wealth Management, Managing Director Janine Lee Craane in her presentation at the BIBA International Business Week conference last Thursday.
“For Barbadians, the opportunity presented by the TIGRS products here are unparalleled. Nowhere else in the world could an investor get a principal protected product, which gives 100% principal protection, 100% of the upside, sold in local currency but invested in US dollars, plus a tax rebate” Chambers went on to say.
The TIGRS series which is unique in Barbados, offers investors a tax rebate on their 5 year investment and at the end, the investor gets back his original investment plus the return generated from the investment in the overseas securities which back the investment.
The TIGRS structure, which the firm has been providing to its Bahamian clients since 2007, gives investors the best of both worlds as it is designed to provide all the benefits of owning the underlying securities directly (ie. If the price goes up then the investor gets 100% of the upside) without any of the drawbacks from that outright ownership (ie. if the price goes down the investor still gets all his money back).
When asked how Royal Fidelity achieves such a seemingly impossible result, Managing Director of the company Charles Chambers said “It’s a relatively simple structure where 80% of the funds raised are invested in Government of Barbados Bonds for 5 years at the end of which those funds plus interest accumulated over the time give back 100% of the amount invested. This is where you get the principal protection. The remaining 20% is used to buy 5 year options which give the 100% participation in any increase in the underlying indices. This is where you get the upside.”