Sagicor Select aims to launch new funds in 2021

Business

Sagicor Select aims to launch new funds in 2021

BY DAVID ROSE

Wednesday, October 14, 2020

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Following a record-breaking 2019, Sagicor Select Funds is now targeting 2021 as the new timeline for listing their Class D and E shares which was thrown off course due to the asset price collapse caused by the COVID-19 pandemic.

With the Jamaica Stock Exchange (JSE) moving towards the creation of more sector specific indices, Sagicor Select Funds has now retooled their strategy to lead the way in creating more listed equity funds specific to those sectors.

The company listed their Class B (financial) and Class C (manufacturing and distribution) shares in late 2019 which garnered a cumulative $6.7 billion in capital with the former being oversubscribed to the tune of 20,000 plus investors who sought to invest in the stock market after the monumental Wigton Windfarm initial public offering (IPO).

Due to the current economic climate, Select Funds delayed the plans to list their Class D and E shares this year which was concurrent with the JSE not creating any new indices during the year. This was also accompanied by the decision of the board to not declare a dividend in May for what is meant to be a bi-annual payment schedule to shareholders.

However, assistant vice-president at Sagicor Investments Reynaldo Thompson hinted at the recent annual general meeting (AGM) the idea for the creation of alternative funds along with the plan for Select Funds in the near future.

“Our intention was to ensure that all investors got a chance to invest in the stock market. That's the purpose of the Sagicor Select Funds. The market conditions will dictate when we do come back to the market. We're currently considering different ideas for new funds. We will put it to the board and then we'll come to the market. Hopefully that's some time in 2021,” Thompson told the Business Observer.

“We're not considering anything similar to Sagicor Real Estate X-Fund. Essentially, we're into portfolio type investments. We're hoping to create funds that are on recognised exchanges that persons can monitor on a daily basis,“ Thompson indicated.

When queries were made about the disposal of the 20.1-million Mailpac Group shares at $1.60 on April 3 which lead to a realised loss of approximately $7.6 million, it was revealed that this was done due to Mailpac not being classified in the JSE's Manufacturing and Distribution index.

“Subsequent to our participation, the JSE advised that Mailpac wouldn't be a part of the M&D index because it's classified in a different sector. Given that Mailpac doesn't align with our objective of investing in the manufacturing and distribution companies, we reduced or sold our position of Mailpac during the course of the year. Those proceeds went to purchasing some of the other stocks that we have in the index.”

This disposal didn't materially affect the Class C share fund which realised a $239.9-million profit in the quarter,which was primarily due to the revaluation of the portfolio shares they hold. Due to the nature of Select Funds, there is no taxation due to the pass through like nature of the entity.

The Class B shares have almost purchased all the stocks in the JSE's Financial Index with the exception of ISP Financial Services, which is one of the most tightly held stocks on the market.

Although Select Funds falls under the Bank of Jamaica's one per cent exemption for dividends to be paid by certain financial companies, the company has given no indication of whether a dividend might be paid in November and whether or not to do a share buyback with the cash on the balance sheet.

“We have not contemplated, but something that we could actually look at in the future,” said Janene Shaw, who chaired the first AGM of Select Funds.

As to the fund's future, Thompson spoke to the quality of companies that Sagicor Select Funds has invested in over the last year.

“We believe that we have invested in strong companies and these companies aren't just strong in Jamaica, but they are Caribbean wide strong. When the pandemic subsides, we expect that these companies will emerge even stronger with growing profitability. We do believe that the stock prices will rebound eventually.”


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