Even as the equity markets slowly recover from their dive in 2020, Sagicor Select Funds Limited has been active in the equity markets through the rebalancing of their portfolios as more companies raise additional equity and cross-list on the Jamaica Stock Exchange (JSE).

Sagicor Select Funds Limited (SSFL) is a close-ended fund which is separated by different classes of shares that track a specific index on the JSE. The class B shares (SelectF) track the financial index of the JSE and contains financial companies while the class C shares (SelectMD) track the manufacturing and distribution (M&D) index which in turn sees it hold a wide cross section of companies from the index. Based on the nature of SSFL, it will rebalance its portfolio to adjust the weightings to align more closely with the index it is tracking.

With Guardian Holdings Limited (GHL) cross listing on the JSE on May 5, SelectF purchased 700,000 shares of the company at $770 for a cost of $539 million on May 26. This was done to matc the fact that GHL is now the third -largest company by market capitalisation on the JSE and would lower the weightings of NCB Financial Group (NCBFG) and Sagicor Group Jamaica Limited (SJ). SelectF also bought 2.68 million shares in the Key Insurance Limited rights issue and 550,000 units of Sygnus Credit Investments Limited (JMD Shares) in their additional public offering (APO). Although Proven Investments Limited had an APO, it doesn’t appear that SelectF participated based on the holdings available on the JSE’s website.

SelectMD participated in the Derrimon Trading Company Limited APO and purchased 13.51 million shares valued at $19.14 million. SelectMD also purchased $46.06 million worth of Jamaica Producers Group Limited, $12.1 million of Lasco Distributors Limited and several other companies during the first quarter. Its only disposal was in GraceKennedy Limited (GK) which was a profitable disposal at $27.14 million. SelectMD is expected to purchase shares in Massy Holdings Limited when it cross lists on the JSE based on the classification to the M&D index.

Although SelectMD was able to finance the various rebalancing of its portfolio from cash on its books along with disposal of GK, SelectF has sold larger portion of its portfolio to achieve the desired rebalancing. SelectF has decreased its NCBFG holdings by 1.98 million units valued at $276.6 million and 3.14 million units in SJ valued at about $150.86 million. SelectF and SelectMD had $64.74 million and $81.13 million in cash at the end of the first quarter.

SelectF reported a net loss of $54.7 million as the value of its larger holdings declined compared to SelectMD which recorded a net profit of $500.87 million in the first quarter. Despite SelectMD’s portfolio being valued at a lower amount, it had higher amounts of dividend income at $23.87 million compared to SelectF which saw a 26 per cent decline to $16.15 million. SelectF’s and SelectMD’s portfolio of stocks was valued at $4.24 billion and $3.69 billion at the end of the first quarter. SelectMD’s net asset value (NAV) has increased by 31 per cent with its stock price up by 24 per cent while SelectF’s NAV has increased by two per cent with a flat performance by its stock price.