Aug 2010 Financial News

Growth Fund focusing on conservative companies

Aug 16, 2010

GIVEN the fact that 2010 has been a difficult year thus far for investment markets across the Caribbean and the wider world, and things remain uncertain going forward, the Caribbean Growth Fund (Fund) managed by Fortress Fund Managers Limited, is remaining focused on conservatively positioned companies.

This approach was expressed by Fortress officials in their report for the second quarter ended June 30th, 2010, which stated that the Fund recorded a negative return of 0.6% for the quarter, was flat for the first six months of the year, and has gained 3.4% for the last 12 months.

The report stated that against the backdrop of major global markets being down anywhere from 10% in the case of the US, to 20% in the case of Europe; Caribbean markets being mixed with Barbados continuing to experience slow declines on very thin trading volumes; and news of slowing economic growth in the world’s major economies, the Fund is continuing to hold positions in very attractively valued regional companies.

“The Caribbean economies are not yet showing signs of sustainable recovery, and more stress may yet be in store”, the report said. “As a result, we are focusing the Fund’s holdings more than ever in conservatively capitalised companies that are likely to have the flexibility to survive and grow through uneven and unpredictable times.”

The report argued that by positioning the Fund in this way it would be well placed to benefit in the future, while accumulating benefits, although not as substantial as previously seen, in the interim.

“We cannot predict when the market will improve and the value of these shares will increase, but we will increase, but we will be positioned for it when the time comes. In the meantime, we can benefit from the accumulation of profits and payments of dividends.”

As it relates to the Fund’s foreign holdings, the report explained that a significant portion of the Fund’s assets is also invested internationally, and that they are confident of their future gains.

“We believe the long-term return prospects for these global holdings are good and that they add essential diversification to the Fund’s regional investments,” said Fortress officials. “We are managing the risk around them, though, in response to market conditions.”

It was stated that at the end of May this year, the Fund reduced its Asian exposure and invested the proceeds in Europe, where the recent market and currency declines had begun to offer up good value.

A similar move was once again made in June, this time with a reduction to the Fund’s allocation to Asia, along with international stocks generally, in favour of cash and the relatively stable Fortress Equity Income strategy.

With these reductions in overall risk, and more than 20% of the Fund’s assets being held in cash, Fortress stated that the Fund is prepared to respond if temporary market weakness creates good buying opportunities in the coming months.


Source:
By Randy Howard
Barbados Advocate
Monday August 16, 2010

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