The Barbados dollar funds managed by Fortress Fund Managers (FFM) “had a strong fourth quarter, ending 2023 with gains across the board.”

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

The report’s introduction attributed the quarter’s gains to a rally in global financial markets in November and December on the hope that interest rates would soon fall, and that central bank policy would become friendlier. “Since early 2022, rapidly rising interest rates aimed at fighting post-pandemic inflation had been a huge headwind for financial markets, so this shift in tone and the hope for lower rates were extremely welcome and cheered by investors.”

Caribbean Growth Fund gains 5.3%

The Caribbean Growth Fund gained 5.3% in the fourth quarter of 2023 and was up 5.3% over the past year.

Globally, equities finished with “meaningful gains”, despite having started on a less enthusiastic note. “October saw weakness due to rising interest rates and geopolitical tensions. In November and December, though, moderating inflation readings in the U.S. prompted a sharp turnaround as investors began to anticipate not just an end to tightening by the Federal Reserve (Fed) but the advent of rate cuts.”

The Fund’s core global investments via the Fortress Global Funds posted gains of between 8% and 12% for the quarter, while holdings in the U.S. biotech sector added between 11% and 22%. Fortress’ position in U.S. regional banks returned 26% in the quarter.  

By contrast, performance in Caribbean equities was “lacklustre”, capping a mostly negative year in the region’s markets. “The Trinidad and Jamaica indices were flat while the Barbados index had a modest gain, driven by FirstCaribbean International Bank which advanced 6% over the quarter on improved results. In Trinidad, Massy Holdings declined 9% and we took the opportunity to add to the Fund’s position at the lower levels. Shares in Guyana, which saw enormous strength back in 2022, were mostly unchanged for the quarter and remained down substantially for the full year,” the report explained.

The net asset value (NAV) or price per share at December 29 was $7.4253. Net assets were $641 million, up from $605 million for the same period last year. The Fund’s annual compound rate of return since inception in 1996 was 7.7% per year with a portfolio that remained well diversified by security, geography, and currency.

High Interest Fund up 2.9% in the fourth quarter

The Caribbean High Interest Fund gained 2.9% in the fourth quarter and was up 4.3% over the past year.

The report noted that global bonds had “an exceptional quarter” as yields fell to reflect lower inflation and interest rate expectations. “U.S. inflation, as measured by the Consumer Price Index, slowed to 3.1% year-over-year in November after two consecutive months of unchanged price levels. The U.S. Federal Reserve(Fed) kept its target rate range unchanged at 5.25-5.50% during the quarter and publicly shifted to a softer outlook. Growing expectations that the Fed was done raising interest rates and actively considering cuts led to lower bond yields in all maturities.”

The Fund’s core allocation to the US$ Fortress Fixed Income Fund returned a solid 5.3% over the quarter and its allocations to specialist managers and emerging market bonds saw gains in the 6% to 8% range, consistent with those segments of the market.  

In Barbados, the local fixed income market was quiet in the quarter, except for the Government of Barbados (GOB) which continued to issue treasury bills. The Fund’s GOB exposure was 12% of the total portfolio.

Corporate holdings performed as expected during the quarter. Cash in the Fund was 13%, lower in the fourth quarter due to the addition of a new short-term corporate position but still higher than Fortress would like.

The NAV of the Fund’s Accumulation share at December 29 was $2.1634, while the Distribution share finished at $1.0332.  Net assets of the Fund were $143 million, down from $144 million for the same period last year. Its annual compound rate of return since inception in 2002 was 3.6% per year and its portfolio remained as diversified as possible across various issuers, industries, geographies, and terms to maturity.

Pension Fund makes gains of up to 5.0%

In the fourth quarter the three classes of shares of the Caribbean Pension Fund gained between 3.2% and 5.0% and were up between 4.2% and 5.6% over the past year. Global financial markets strengthened as inflation eased and bond yields fell in anticipation of central bank easing.

Fortress Investment Forum returns on March 7

The report included an invitation to investors to the annual Fortress Investment Forum on March 7 at the Frank Collymore Hall. The forum, now in its 14th year, will provide updates on the investment world and on the performance of Fortress’ funds as well as answer attendees’ questions.

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

Fortress Fund Managers