Barita targets $3b for new unit trust funds

BY SHAMILLE SCOTT Business reporter

Friday, May 23, 2014

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BARITA Investments is aiming to attract as much as $3 billion in investments into its recently launched investments funds.

The company introduced the Barita Unit Trusts Income Portfolio and the Barita Unit Trusts Foreign Currency (FX) Bond Portfolio following the Government of Jamaica's mandate along with the International Monetary Fund (IMF) through the Financial Services Commission to phase out the retail repo market.

So far, the company has about $250 million in its Unit Trusts Income Portfolio, following the transer of retail repo clients to it.

"The Governement had given us the mandate, so what we told or clients in a letter was that as of the 31st of March, all maturities thereafter will go into this new plan," said Rita Humphries-Lewin, chairman of Barita. The company had a breakfast launch of the products yesterday at the Terra Nova Hotel.

Ian McNaugton, managing director at Barita told the Caribbean Business Report, that the $3 billion was the company's initial target for the first year.

Both funds are aimed to attract individuals and corporate investors and is part of a shift towards more collective investments schemes (CIS).

Barita Unit Trusts Income Portfolio is a unitised portfolio invested in high grade interest bearing instruments such as Government of Jamaica instruments, Bank of Jamaica instruments, preference shares, and promissory notes --giving investors the same benefits of a repo by allowing regular payments, while benefiting from competitive interest rates.

As at May 19, that product has a current yield of 7.56 per cent.

Meanwhile, the FX Bond Portfolio provides a hedge against the devaluation and invests in foreign currency interest bearing instruments of local and sovereign securities, and local and international corporate enterprises of
A-grade rating. As at May 19, the portfolio has a current yield of 6.02 per cent.

Repos that were denominated in foreign currency, will move to the FX fund, which is primarily comprised of a mixture of those who want US denominated funds and people who had US denominated repos, McNaugton said.

"Our clients are quite comfortable with it and nobody is complaining", said Humphries-Lewin. " Because they see we have been doing-good with our funds and it's doing pretty well."

The Securities Act, which falls under the remit of the Financial Services Commission is being revamped along with the harmonisation of the Unit Trust Act and the Mutual Funds Regulations into a new CIS legislation.

CIS's main feature is that members are the sole owners of the assets in the scheme and neither the trustees of the scheme nor the managers can own assets in it (but can invest in the scheme).

The scheme would facilitate the development of local mutual funds and hedge funds.

Now, both local unit trust funds and overseas mutual funds are offered in Jamaica, but local mutual funds are not allowed under current legislation.





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