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Financial News

Dec 2009 Financial News

A Change For ROYTRIN Investors

Dec 09, 2009

Local banking group RBTT Financial and its Canadian parent Royal Bank of Canada are changing the way rates are calculated for their Roytrin TT dollar and US dollar income funds.

For now, Roytrin income fund investors will continue to buy and sell units at TT$25 and US$25 respectively.

They will have this facility in place until the end of the year.

But from January 4, 2010, the first business day of the year, units in both funds will be adjusted on a floating net asset value instead of the fixed rate of $25.

In the coming weeks, Roytrin investors will have time to learn how changes to the funds impact on their investment portfolios.

RBTT Financial has advised investors to review their savings and investment objectives.

Last Thursday, RBTT Financial Group chief executive Suresh Sookoo fielded e-mail enquiries from the Business Express on the changes to the Roytrin income funds and their impact on investors.

Here are his answers:

Q: What is the reason/rationale behind adjusting the Roytrin funds at this time?

A: RBTT and RBC have made changes to the Roytrin TT and US dollar Income Funds that will result in greater transparency to investors and bring practices in line with internationally accepted standards.

Q: Is it in line with RBC’s international standards because security funds are operated this way in more developed markets?

A: The changes to the TT and US dollar Income Funds are in line with the prudent management of funds of these types, generally, not just at RBC. It is also in the best interest of our clients as it will give them greater transparency about the risk and value of their holdings.

Q: How will this affect investors in Roytrin?

A: Right now investors are not affected by the changes as they will only come into effect on January 4, 2010. In fact, to allow unit holders time to adjust to the new practices, arrangements have been established between RBC and the respective Funds to ensure the assets of the funds are sufficient so the underlying Net Asset Value (NAV) is valued at $25 each day until December 31, 2009.

After that, from January 4, 2010, the first business day of the New Year, the NAVs of both the TT and US dollar funds will be calculated and published daily, and units will be available for purchase and sale on a floating NAV basis.

Q: Does it translate to investors being able to realise substantial gains in one month then nothing at all in another month, depending on market performance?

A: It is important to understand that these funds are intended to provide investors with a steady income while limiting downside risk to their original investment capital.

As a result, we have taken the decision to discontinue the practice of redeeming and accepting subscriptions for units at a ’fixed’ Net Asset Value (NAV) of TT $25 and/or US$25 as this does not accurately reflect the true value of the funds’ underlying investment portfolios.

That said, as stated in the prospectuses of both funds the Investment Manager will seek to maintain the unit price at $25 on the funds, thereby preserving the original value of the unit holder’s investment.

Q: It is understood that US$23 million have been reserved to pay out to investors who may want to withdraw their investments in Roytrin?

A: The injection of US$23 million provides the portfolio manager the time and liquidity to continue to effectively position the portfolio of underlying assets to generate strong income returns to unit holders going forward.

Q: Does this mean that RBTT expects a number of investors to withdraw?

A: Firstly, it is important to understand how Mutual Funds work. They are designed to make money for investors, by having professional money managers do the work of selecting a range of investments so unit holders do not have to become investing experts themselves.

Different types of mutual funds have different objectives, invest in different types of securities and carry different risk profiles and it is up to the investor to determine which is right for them.

However, we have not experienced what could be considered abnormal activity to the funds.

Q: What are the possible benefits to investors then of this new adjustment to the Roytrin funds?

A: Our Investors will continue to benefit by participating in a fund which is managed to an international standard by professional money managers and will be assured that their investments remain unaffected to December 31, 2009.

Moreover, between now and December 31 unit holders will have the opportunity to assess their individual investment options and choices with no risk to their own capital and to consider appropriate investment choices going forward.

In addition, the arrangements made between RBC/RBTT and the funds ensure that the Net Asset Value (NAV) is $25 or better when markets open for business on January 4, 2010, with the closing NAV at the end of that day to be the first occurrence of the resulting floating NAV.

Trinidad Express
Wednesday, December 9th 2009