Fortress adds to positive performance in Q4 2021
Fortress Fund Managers (FFM) recorded positive performances in all its funds in the fourth quarter of 2021, continuing an encouraging trend from previous quarters.
Investors received this news recently in the leading fund manager’s December 2021 quarterly report which highlighted its three Barbados dollar funds – the Caribbean Growth Fund, the Caribbean High Interest Fund, and the Caribbean Pension Fund.
The report’s introduction noted that Fortress’ global and regional equities continued to strengthen in the fourth quarter, capping off “a very good year.” It added: “While markets initially weakened on concern over the spread of the new Omicron COVID-19 variant, they found their feet again and finished the year stronger, reflecting company earnings growth and still very low interest rates.”
Caribbean Growth Fund up 17.9% over past year
The Caribbean Growth Fund gained 2.7% in the fourth quarter and was up 17.9% over the past year. Going forward, Fortress continues “to see very good prospects for the kinds of high-quality, well-valued shares where the Fund invests.”
Globally, equities rallied in October but traded lower in mid-November on concerns over the Omicron variant and the U.S. Federal Reserve’s (Fed’s) tapering and rate hike schedule. As fears of renewed pandemic lockdowns subsided, U.S. stocks rose in December, and bond yields increased. Yields finished marginally higher for the quarter, and among global equities the U.S. outperformed international and emerging markets.
“Among the Fund’s larger global allocations, the Fortress US Equity Fund and the International Equity Fund returned 7% and 6% respectively,” the report said.
Regionally, the Trinidad index posted a gain of 5% while other major regional indices were down. Massy Group, part of the Trinidad index and the FFM portfolio, advanced 27% over the quarter. Barbados and Jamaica, meanwhile, continued to experience stalled tourism activity for much of 2021. “Equity markets in these tourism-dependent markets may recover following better economic performance in 2022,” the report suggested.
The Growth Fund’s net asset value (NAV) per share as of December 31 was $7.4769. Net assets were $629 million, up from $522 million this time last year. The Fund’s annual compound rate of return since inception in 1996 is 8.4% per year. Its aim remains capital growth over the long term and the Fund uses a value approach to invest primarily in Caribbean and international equities.
Caribbean High Interest Fund records 1.3% increase over past year
The Caribbean High Interest Fund was up 0.2% in the quarter and up 1.3% over the past year. The net asset value (NAV) of the Fund’s Accumulation share as of December 31 was $2.1303, while the Distribution share finished at $1.0172. Net assets were $143 million, up from $139 million this time last year.
Over the quarter, high yield bonds in global markets outperformed investment grade as investors searched for yield amidst low rates and tight spreads. “Our global fixed income investments via the US$ Fortress Fixed Income Fund were approximately unchanged over the quarter. Some of our corporate bond positions were called by the issuers, and we took the opportunity to participate in a few tender offers at attractive yields. Our small positions in bond alternatives had good returns in the quarter and contributed nicely to the Fund’s overall return,” the report explained.
Closer to home, the Government of Barbados (GOB) resumed bond issuance, with a five-year, 4.25% note. FFM is yet to see how broad market participation was, but was encouraged to see a local GOB issue, the first since 2018 in the market. “The Fund’s GOB weighting fell from 9% to 8% as we added more Series B at attractive levels to replace GOB Series F bonds as their final maturity neared. Our local corporate bond positions continued to perform well.”
The High Interest Fund’s annual compound rate of return since inception in 2002 is 3.9% per year. Its portfolio remains as diversified as possible across various issuers, industries, geographies, and terms to maturity while focused on income and capital preservation.
Pension Fund shares gain up to double-digits over past year
The three classes of shares of the Pension Fund also performed positively, gaining between 0.6% and 2.3% in the fourth quarter. They were up between 3.8% and 14.7% over the past year with equity investments continuing to outpace returns from bonds.
Fortress Fund Managers manages over Bds $800 million in assets across 12 funds with investments in regional, US, international and emerging markets.