PRESIDENT of the Jamaica Securities Dealers Association, Anya Schnoor, says the new unit trust market will allow the ordinary Jamaican to invest in critical sectors such as infrastructure development, oil and gas and commercial real estate in Jamaica.

Schnoor, was speaking at the Scotia DBG Corporate Investments Seminar on Friday. As CEO of Scotia DBG Investments and Executive VP, Scotiabank Group, Schnoor was keen on the recent lifting of the moratorium on the issuance of the new unit trust funds.

“For the investing public, the opening up of the unit trust market will provide an expanded universe of investment opportunities,” she said.

Scotia DBG Fund Managers currently manages over 52 per cent of the overall $14.79 billion unit trust market in Jamaica.

Schnoor said that the change will allow for the risk reward relationship to be a fundamental feature when providing financial services to clients.

“No longer can investors expect to get high returns without taking some of the underlying risk involved in the transaction,” she said.

However, the risks aside, there are important improvements over the repo model, which relied heavily on government’s appetite for borrowing and forced interest rates upward.

According to Schnoor, the unit trust model can mobilise efficiently the funds of small and large investors into appropriate “productive” investment opportunities within the economy.

“If we take a look at Trinidad and Tobago we will see that there is a very large established unit trust market in that country, where savings of small investors are mobilised and invested in important sectors of their economy. These sectors include energy, infrastructure, real estate and equities,” Schnoor said.

“We expect new unit trust funds to focus on areas within the economy that were not accessible to small investors previously such as venture capital market, commercial real estate and infrastructural projects such as financing highways, airports, oil and gas, ports and tourism,” Schnoor added.

Bruce Bowen, President and CEO, Scotia Group Jamaica also encouraged potential investors to take advantage of the investment climate facilitated by the debt exchange. “As the deficit reduces, we must as a country increase our investment in education, security, physical infrastructure, energy efficiency and the social safety net for those most vulnerable in society because in the end as a country it is important that we look at the overall well-being of our people,” Bowen said.

The greater diversification that the unit trust model facilitates will also serve to strengthen the financial sector and along with the Junior Stock Exchange, make capital available for small companies and entrepreneurs who need the funding.

The opening of the unit trust market is in line with important reforms suggested by the International Monetary Fund (IMF) with which Jamaica entered into a renewed borrowing relationship last month. Some of these reforms include a move away from the repo model and adjustments in risk tolerance and capitalisation of the securities dealers. Schnoor said the JSDA has always advocated for these changes.

“The JSDA has spent the better part of the last three years working with the Financial Services Commission on the development of a new risk based capital model and we are encouraged that this model may be the standard finally used for the industry,” she said.