The three Barbados dollar funds managed by Fortress Fund Managers (FFM) started 2024 on a “positive note”, achieving gains in the first quarter of the year.

The results were accomplished in the context of the strengthening global equity market, falling prices in U.S. bonds and the mixed performance of shares in the Caribbean.

Investors received this news in the leading fund manager’s March 2024 quarterly report for the Fortress Caribbean Growth Fund, the Fortress High Interest Fund and the Fortress Caribbean Pension Fund.

Growth Fund gains 2.7%

The flagship Fortress Caribbean Growth Fund gained 2.7% in the first quarter of 2024 and was up 4.9% over the past year.

Broad gains in global equities across sectors and geographies were achieved while Caribbean markets mostly weakened. “Investors reacted positively to resilient corporate earnings and to the spread of artificial intelligence technology that could benefit the largest technology companies,” the report said.

Unfortunately, inflation increased in January and February. “The U.S. Federal Reserve (Fed) shifted from talking about upcoming rate cuts to more of a ‘wait and see’ mode that could see rates stay higher for longer. The shift put pressure on bonds, but stocks largely shrugged off the news.”

In the Caribbean, equity performance was mixed. “The Trinidad index was down 2% for the quarter, Jamaica was up 2% and Barbados gained 9% on an outsized impact from FirstCaribbean International Bank which makes up most of that index.”

The Growth Fund’s portfolio continued to benefit from broad diversification with more than two thirds of total assets invested globally. The net asset value (NAV) or price per share of the Fund at March 28 was $7.6228. Net assets were $657 million, up from $620 million for the same period last year. The Fund’s annual compound rate of return since inception in 1996 was 7.7%.

High Interest Fund up 2.8% over last year

The Fortress Caribbean High Interest Fund gained 0.5% in the first quarter and was up 2.8% over the past year.

During the quarter, global bond prices declined as interest rates rose on stronger than expected economic growth and inflation readings in the U.S. “This came after the U.S. Federal Reserve (Fed) moved to an easing bias late last year and prompted investors to reassess just how quickly the Fed might be able to cut its target rate this year.”

Against the backdrop of higher rates, the High Interest Fund’s core allocation to the US$ Fortress Fixed Income Fund outperformed its benchmark but still declined 0.2% over the quarter. As inflation persisted, the Fund’s holdings of inflation-linked bonds performed well and its allocations to emerging market bonds gained slightly.

On the local front, the bond market saw some marginal activity over the quarter as the Government of Barbados (GOB) increased its treasury bill issuance. “Coming out of the recent 2024/25 budget, we expect this activity to grow as the Government leans on the local market more to fund expenditure. Over the quarter, the Fund’s corporate holdings performed as expected, and some GOB positions benefited from slightly higher market prices. Cash in the Fund is now 14%, still higher than we would like but improving. The average term to maturity of the Fund’s portfolio is six years and the gross yield is 4.4%, a good estimate of its medium-term return potential,” the report noted.

The NAV of the Fund’s Accumulation share at March 28 was $2.1736, while the Distribution share finished at $1.0380. Net assets of the Fund were $144 million, up from $142 million for the same time last year. The Fund’s annual compound rate of return since inception in 2002 was 3.6% per year.

Pension Fund makes gains

The three classes of shares of the Fortress Caribbean Pension Fund gained between 0.8% and 2.4% in the first quarter and were up between 3.1% and 5.1% over the past year.  

The pension segment of the quarterly report ended with a reminder that an automatic savings plan was “one of the best systems” for defending “ourselves against ourselves” because it placed decisions on ‘autopilot’. “There is no fooling ourselves as savings are each month taken off our pay before we can spend them. And there is no room for daily emotions as those savings are invested steadily in long-term assets to be there for us long into the future, the product of our hard work and steady hands.”

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

Fortress Fund Managers