Feb 2010 Financial News

Varying prospects for Fortress funds – but mostly good things expected

Feb 22, 2010

FOR the remainder of 2010, there are a number of developments that could have a bearing on the performance of three of the funds managed by local investment firm Fortress Fund Managers.

However, despite some of the uncertainties that exist, the management of the firm believes that each of these funds – the Caribbean Growth Fund, the Caribbean High Interest Fund and the Global Value Fund – should see reasonably good returns for this current financial year.

According to the firm’s quarterly report for the fourth quarter of 2009, which ended December 31st, Fortress is genuinely optimistic about the prospects for 2010, for example, in the case of the Caribbean Growth Fund.

This Fund, which only grew by four per cent for 2009, suffered because of the declining performance of regional stock exchanges, along with the fact that the signs of recovery being seen in the world’s developed markets had not yet made their way to the Caribbean.

However, given the fact that international agencies, such as the International Monetary Fund (IMF), have upgraded their forecasts for higher than expected growth in the world economy for 2010, it is that this improvement would make trickle down quickly to regional markets, and therefore result in higher returns for the Fund, which the report stated is well-positioned to take advantage of such a recovery.

As it relates to the Caribbean High Interest Fund, it was projected that despite the current low interest rate environment, Fortress still sees good prospects for the Fund.

The quarterly report pointed to the fact that the Fund continues to be well-diversified by strategy and geography, and argued that even with cautious positioning, it is still generating a running yield of over five per cent.

As a result, coming out of the downturn seen earlier in 2009 and at the end of 2008, which resulted in a return for 2009 of only 4.26 per cent, it is expected that a return closer to the Fund’s average annual of 6.1 per cent will be seen for 2010 and beyond.

Finally, in the case of the Global Value Fund, which recorded an improved return of 21.26 per cent at December 15th, 2009, when compared to the full year return of 29.91 per cent on the MSCI World Index, there are expectations that volatility in the market could still be at a high level this year.

The quarterly report stated that during the latter part of the fourth quarter of last year, new information on Dubai surfaced suggesting possibly further problems to come.

“Emerging markets were down sharply on this news on fears of further contagion throughout world markets,” the report said. “The impact was mostly minimal to the more developed markets, but the overall optimism we have seen since March appears to have waned.”

Fortress believes that going into 2010 the market may exhibit greater volatility, and as a result, they may seek to rely more on the Equity Income Strategy.

“It provides us with an opportunity to be invested in stable companies with good dividends with only bond-like volatility,” said the investment firm. “The US$ may strengthen in 2010 in response to Fed rate increases and slightly improved fundamentals. This may be a headwind for the international components of the Fund in the year ahead.” (RH)


Source:
Barbados Advocate
Monday February 22, 2010

http://www.barbadosadvocate.com/newsitem.asp?more=business&NewsID=9101