The Barbados dollar funds managed by leading fund manager, Fortress Fund Managers (FFM), were largely unchanged in the second quarter of 2023 while prices of investments across the funds remained “attractive and consistent with meaningful future returns”.

This news was shared with investors recently in FFM’s June 2023 quarterly report for the Fortress Caribbean Growth Fund, the Fortress High Interest Fund and the Fortress Caribbean Pension Fund.

And in the wake of proposed changes to the National Insurance Scheme, the report reiterated the importance of securing financial security in retirement. These potential changes “have highlighted once again the imperative to save and invest independently for the future. The more robust the plans we have, the better. We add our voices to those that call for the government scheme to be secure, well-funded, well-invested, and well-governed. We also acknowledge, though, that it has natural limitations and that each one of us has a role to play in securing our own financial security in retirement.”

The report also highlighted the formula for retirement security – spend less than earned and invest the rest sensibly for the long term.

Caribbean Growth Fund up 0.9% over past year

The Fortress Caribbean Growth Fund declined 0.1% in the second quarter and was up 0.9% over the past year with gains in the Fund’s global investments being offset by weakness in Caribbean Holdings.

The quarter started cautiously with concerns over U.S. debt ceiling negotiations and regional banking stress lingering. Equities eventually rallied on signs that the U.S. Federal Reserve (Fed) might be able to beat inflation without causing a recession.

U.S. equities performed strongly especially in the technology sector. Europe and Asia also gained despite weaker economic reports. Japanese stocks were among the strongest in the world in the second quarter, gaining more than 10% in U.S. dollar terms, while emerging market stocks were little changed due to weakness in China. The Fund’s core allocations to the Fortress Global Funds contributed returns between 2% and 4% during the quarter.

In the Caribbean, on the other hand, the Fund’s holdings “were a headwind” with the Jamaica and Trinidad indexes reporting losses of 4% and 8% respectively as Barbados saw marginal gains.

The Caribbean Growth Fund continued to be “positioned in a globally diversified mix of good companies trading at reasonable prices, where the long-term return prospects remain substantial.”

The net asset value (NAV) or price per share at June 30 was $7.2578. Net assets of the Fund were $625 million, up from $612 million for the same period last year. The Fund’s annual compound rate of return since inception in 1996 was 7.8% per year.

Caribbean High Interest Fund up 1.9% over past year

The Fortress Caribbean High Interest Fund recorded gains of 1.9% over the past year with a decline of 0.1% in the second quarter.

Bond yields rose again and prices fell after a brief spike at the end of the first quarter on fears around the U.S. regional bank failures.

The Fund’s core U.S. bond investments performed in line with the broader market, declining about 1% during the quarter. FFM’s “small allocations to high yield corporate and emerging market bonds posted gains which contributed to the overall return. Over the quarter, we reduced some of the Fund’s medium-term holdings and continued to add incrementally to long-dated U.S. Treasury exposure. This nudged up the portfolio’s average yield and term to maturity.”

In Barbados, the bond market remained quiet. “While there were no new corporate issues, we rolled and added to some of the Fund’s maturing corporate positions. Our existing corporate and government holdings continued to perform as expected. Cash in the portfolio is still higher than desired at 19% of the portfolio. The average gross yield of the portfolio increased slightly to 4.2% during the quarter, a good estimate of the Fund’s medium-term return potential.”

The NAV of the Fund’s Accumulation share at June 30 was $2.1119, while the Distribution share finished at $1.0080.  Net assets of the Fund were $142 million, down from $144 million for the same period last year. The Fund’s annual compound rate of return since inception in 2002 was 3.6%. Its portfolio remains as diversified as possible across various issuers, industries, geographies, and terms to maturity.

Caribbean Pension Fund shares up between 1.8% and 1.9% over past year

The three classes of shares of the Fortress Caribbean Pension Fund returned between -0.1% and 0.1% in the second quarter and were up between 1.8% and 1.9% over the past year. Global stocks and bonds strengthened in the quarter, but Caribbean equities declined.

The pension fund report concluded by highlighting the importance of taking enough risk when saving and investing, especially for younger people who have many decades until retirement.  FFM reminded investors to make long-term assets like stocks the cornerstone of retirement saving.

Fortress manages over Bds $800 million in assets across 12 funds with investments in regional, US, international and emerging markets.