Mixed results for Sagicor's Select Funds

Business

Mixed results for Sagicor's Select Funds

Sagicor reports mixed results from its Select Funds for Q2

BY DURRANT PATE
Observer Business Writer

Wednesday, August 12, 2020

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Sagicor is reporting mixed results for its two Select Funds, the Manufacturing & Distribution and the Financial Select Funds, for the second quarter ended June 30.

On the positive side, the Manufacturing & Distribution Select Fund recorded a net profit of $239.9 million for the second quarter of 2020. This was primarily due to unrealised appreciation in the value of investments of $230.5 million.

The appreciation in investment value reflected a general increase in the prices of listed manufacturing and distribution companies relative to the end of March 2020. This was evidenced by the higher value of the Jamaica Stock Exchange (JSE) Manufacturing & Distribution index by 9.8 per cent since the end of March 2020.

In addition, the fund earned $12.5 million from dividend income for the quarter. This out-turn was lower compared to the previous quarter, and possibly reflects the impact of COVID-19 on company's operations.

The companies within the sector that provide household items may not be adversely impacted by the global pandemic. However, some companies are still reserving dividend payments to buffer their cash holdings due to possible fall-out in future.

Total expenses for June quarter amounted to $3.5 million with the cost largely comprised of management fees and transaction costs of $1.5 million and $0.8 million, respectively. During the quarter, the fund capitalised from the lowering prices on the market and acquired holdings to improve the portfolio weightings.

This led to portfolio weightings moving closer towards the index weightings during the quarter. At the end of June 2020, the total asset was valued at $3.1 billion.

FINANCIAL SELECT FUND DECLINES

For the quarter ending June 2020, the Financial Select Fund recorded a net loss of $323.7 million. This out-turn was due to unrealised depreciation in value of investments of $334.9 million.

The fund holds securities listed on the JSE and the value of these stocks reflected the overall market conditions that prevailed during the quarter. The fund, which primarily earns income from dividends, had dividend income of $16.6 million for the quarter.

This was lower than previous quarters due to the impact of COVID-19. The central bank's decision to suspend dividend payments by deposit-taking institutions as well as companies reserving payments to buffer their cash holdings due to possible fall-out were among factors that led to reduced dividend earnings.

Total expenses for June quarter amounted to $5.7 million. The cost was largely comprised of management fees and trustee fees of $3.0 million and $1.6 million, respectively.

At the end of June 2020, the total asset was valued at $4.15 billion. This comprised Financial Assets held by the fund of $4,04 billion. During the quarter, shares in Key Insurance were acquired.


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