The three Barbados dollar funds managed by Fortress Fund Managers (FFM) all registered gains in the second quarter of 2025, adding to their healthy year-to-date returns across the board.
This upbeat news was shared with investors recently in FFM’s June 2025 quarterly report for its Fortress Caribbean Growth Fund, Fortress Caribbean High Interest Fund and Fortress Caribbean Pension Fund, acknowledging results might seem surprising given the amount of “bad” news during the quarter.
“Certainly, in the first weeks of April, markets were unusually volatile as investors tried to understand just how much economic pain the U.S. administration was prepared to take in pursuit of its hard-line tariff strategy. The answer, as it turned out, after a few days of financial market panic, was not much. The tariffs were paused, hopes for clearer heads to prevail were rekindled, and the investing world eventually got on with life,” the leading fund manager explained.
Caribbean Growth Fund up 4.2% in Q2 and 9.4% over past year
The Fortress Caribbean Growth Fund gained 4.2% in the second quarter and was up 9.4% over the past year. Global equities rallied after some early tariff-related volatility while Caribbean shares were weaker.
The net asset value (NAV) or price per share at June 27 was $8.1156 and net assets were $716 million, up from $645 million for the same time last year. The Fund’s annual compound rate of return since inception in 1996 is 7.6% per year.
Global shares felt significant stress at the start of the quarter but ended on a strong note. “The drop came after the U.S. administration announced immediate and unexpectedly high tariffs on goods from its largest trading partners. Financial markets seized up for a few days until the implementation of the tariffs was eventually paused. Stocks recovered quickly as investors concluded the administration had limited tolerance for deep economic pain,” the report explained.
During the rest of the quarter, a sustained rally in equities pushed the broad U.S. index to all-time highs. Equities in emerging markets “continued to rally despite negative headlines, adding to an already strong year led by China and Brazil. China responded to U.S. tariffs by imposing counter tariffs and easing monetary conditions. The two countries later reached a trade deal that was received positively by the market.”
The story was different in Caribbean stock markets which ended the quarter lower. Jamaica’s performance was the weakest, down 6%, while Trinidad and Barbados declined 2%. Fortress noted: “Most of the Fund’s Caribbean holdings followed the trend of their respective markets. An exception was Guardian Holdings, which had a 19% total return for the quarter. This was a welcome recovery after a prolonged decline in the stock price since 2023. We had previously added to this position at lower levels as the valuation became one of the most compelling in the region.”
High Interest Fund up 4.0% over past year
The Fortress Caribbean High Interest Fund gained 0.9% in the second quarter and was up 4.0% over the past year with gains for short-term U.S. treasuries and corporates and declines for longer bonds as uncertainty increased around tariffs and their impact on inflation.
The NAV of the Fund’s Accumulation share was $2.2703 at June 27, while the Distribution share finished at $1.0854. The Fund’s net assets were $150 million, up from $138 million for the same time last year. The Fund’s annual compound rate of return since inception in 2002 is 3.6% per year.
Fortress said that global bonds had a choppy quarter that ended with slightly positive returns. “Despite a pause on major U.S. tariffs, the bond market still anticipated that economic damage from the policy uncertainty may cause the U.S. Federal Reserve (Fed) to cut rates later this year. This pushed short maturity yields lower, with the 2-year U.S. treasury yield falling from 3.9% to 3.7%. The Fed kept its target rate unchanged as it waited to see the impact on inflation from tariffs.”
Locally, the Government of Barbados added to its issuance programme with a short-term US$ denominated bond. Routine issuance of Treasury Bills continued but otherwise the local bond market was quiet. Fortress said that Moody's upgrading of the long-term rating of the Government of Barbados to B2 from B3 was “a welcome uptick but still leaves the rating firmly in speculative territory.”
The High Interest Fund’s local corporate bonds performed as expected during the quarter, and cash in the Fund rose to 13%. The average term to maturity of the portfolio was slightly above six years and the gross yield was now 4.1%, a good estimate of its medium-term return potential.
Pension Fund makes gains of up to 3.8%
The three classes of shares of the Fortress Caribbean Pension Fund - Aggressive Accumulator, Conservative Consolidator and Capital Secure - gained between 1.3% and 3.8% and were up between 4.6% and 9.0% over the past year.
Fortress summed up the Quarter 2 performance of its funds’ by reminding investors “that “noise” is not necessarily reality. Underneath the loud headlines and short-term, knee-jerk reactions, market prices for the kinds of high-quality securities where we invest have remained quite good. Operating performance of some companies is not ideal, but on balance it’s not bad either – and there are areas where it is excellent.”
Fortress manages over Bds $900 million in assets across 12 funds with investments in regional, US, international and emerging markets.
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