BURTON DON WEHBY, chief operating officer of the Financial Services Division of Grace, Kennedy & Company Limited, announced that as of December 15, 2004, the fund increased its Assets Under Management (AUM) to just under US$25 million, up from US$8 million in December 2003 a 300 per cent increase. Additionally, the 12-month yield for the same period was 8.48 per cent. Launched in October 2002, GK Caribbean Fixed Income Fund is the first mutual fund to invest in U.S. dollar-denominated sovereign debt of English-speaking Caribbean countries.
The fund is also the most optimally diver-sified mutual fund in the region. As of Dec-ember 2004, the fund's portfolio holdings included instruments from the Republic of Trinidad and Tobago, Barbados, Jamaica, Belize, Aruba, Grenada, St. Lucia, and the Cayman Islands. Raymond Chang, who also serves as chairman of CI Funds Management, one of Canada's largest investment fund companies, chairs GK Caribbean Fixed Income Fund.
Commenting on the fund's performance. Gary Peart, Portfolio manager said: "During the period April to June 2004, the portfolio experienced a number of challenges. The yield on the fund decreased to approximately six per cent due to the sharp increase in the interest rate expectations of investors in the United States. The 10-year treasury yield increased from sub-4 per cent to as high as 4.8 per cent within a month. The movement in interest rates precipitated a decrease in the prices of the higher-rated securities in the portfolio."
Mr. Peart states that the benefit of portfolio diversification enabled the fund to withstand setbacks without a substantial decrease in the price. He pointed out that several external factors including the improvement in the Jamaica's macroeconomic indicators; Belize's ability to access US$100 million in funding; and the improvement of Trinidad and Tobago, Barbados and St. Lucia's bond prices as a result of lower interest rate expectations in the United States bond market contributed to the increase in the fund price to US$11.62, from July to December 2004.
"Our intense focus on client needs, along with the drive towards optimal diversification of the portfolio in high-quality instruments, were the main factors that pushed the fund's stellar performance," said Safiya Burton, regional marketing manager of GK Funds Management (Cayman) Limited.
"Our portfolio managers are relentless in selecting securities that will maximise the investment value to our investors and I am confident that 2005 will bring even greater success.
Regarding the fund's outlook for 2005, Mr. Peart said, "We expect that interest rates in the United States will gradually increase over the next two to three years and have started to position the portfolio to take advantage of this trend."
