Dec 2010 Financial News

Mutual funds poised for upward push

Dec 20, 2010

AFTER witnessing a decline in interest rates, stock prices and general investor confidence, officials at Fortress Fund Managers Limited (Fortress) hold the view that now could be a good time for investors.

In his commentary on the performance of the Caribbean Growth Fund (Fund) for the period October 1, 2009 to September 30, 2010, Investment Director at Fortress, Roger Cave, said “while the trip to 2010 has not been easy in recent years, we are now at a starting point which may, in hindsight, prove to have a been a good one for existing investors – and for new investors in the Fund.”

Cave was making the point that following the experience of the last couple years, which were tough for the Fund and Fortress, with markets declining, providing very little returns for shareholders, things seem to have reached a point where the only direction from here is up.
He made the point that interest rates in much of the world remain extremely low, stating that this tends to be positive for equities because their earnings and dividends look better and better by comparison.

“In many cases, dividend yields are higher than the yields on long term bonds,” he said.
Cave stated that regional stock markets are now priced similarly to where they were in 2003, with price/earnings ratios being quite attractive, even on current depressed earnings.

“Many of our larger regional holdings have lost 40 per cent to 50 per cent of the value from their highs of a few years ago and we believe are now priced to deliver reasonable returns over the medium term,” he said. “The international stocks in the portfolio also have reasonable valuations and even in an uncertain economy should be in a position to generate meaningful returns going forward.”

In conjunction with all of these developments regarding the potential for reasonable and meaningful growth, the Investment Director made the point that the general economic framework and environment needs to be more stable.

In light of this, he expressed Fortress’ hopefulness that government and business leaders will find the support they need to make critical improvements to our fiscal situation, which has deteriorated in the last couple of years; capital markets; and financial institutions.

“The growth and prosperity of all of us in the region depends on it,” he emphasised.


Source:
By Randy Howard
Barbados Advocate
Monday December 20, 2010

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