Ashford W. Meikle, Staff Reporter

The president and CEO of PanCaribbean Financial Services (PCFS), Donovan Perkins (right), addresses shareholders at the company's annual general meeting last Friday at the Terra Nova Hotel. Beside him is the chairman of PCFS, Richard Byles. - Junior Dowie/Staff Photographer

PANCARIBBEAN FINANCIAL Services (PCFS) will launch a U.S. dollar fixed-income fund later this year which will join its other unit trust products, Sigma Optima and Sigma Solution, the chief executive officer, Donovan Perkins, told shareholders on Friday.

"During the third quarter [of the 2006 financial year] we plan to launch Sigma Liberty, a U.S. dollar fixed-income fund," said Perkins at the company's annual general meeting at the Terra Nova Hotel.

With over $6 billion under management, PanCaribbean is the country's largest unit trust with 41 per cent of the market, and has been the best performing unit trust over the past two years. However, since the beginning of the year, the equity-based Sigma Optima has had a negative annualised growth rate of 38 per cent, unsurprising given the 20 per cent year-to-date decline in the main Jamaica Stock Exchange Index. Similarly, Sigma Solution ­ which invests in BOJ securities and government paper ­ has had a conservative 12 per cent growth, reflecting the gradual trending down of interest rates.

REVISING TECHNOLOGY

Perkins told Sunday Business after the AGM that PanCaribbean had "converted the whole real estate fund, real estate has been liquidated, to a U.S. fund. But because of how the technology was set up for a real estate fund we are now revising the technology so that it will not operate as a real estate fund but as a fixed-income fund, pretty similar to Sigma Solution."

The company has said that the portfolio will comprise U.S. dollar debt instruments issued by the Government of Jamaica, arguing that its objective is "to offer a portfolio that maintains the real value of an investor's wealth while offering the opportunity to earn more."

The hard-currency product, which has been in the works for some time and was awaiting regulatory approval, is well timed, based on the increasingly competitive unit trust and mutual fund market with companies jostling to maintain customers. For example, NCB offers its AIC (Canada) mutual funds through its subsidiary, NCB Capital Markets. In fact, another Canadian unit trust, CI Funds, is offered, or about to be offered, by about half a dozen local companies. And Jamaica's largest bank, Scotiabank, offers a range of foreign-denominated unit trusts.

Perkins, who has spoken of making PanCaribbean a one-stop financial house ­ hence the company's foray into commercial banking ­ told shareholders that "If you look at where institutions are heading today, not just Jamaica but overseas as well ... we believe that we should be able to offer our clients at least 70 per cent of their financial needs.

And part of that strategy is to start offering stock brokerage services to its retail customers by July.

"We expect to complete the installation of our retail stock brokerage platform this summer so we can start trading for a wider number of clients," the CEO said at the AGM. In its first year of operation ­ with only 12 institutional customers ­ the stock brokerage division handled volumes of $4.7 billion and ­ with a 12 per cent market share ­ is ranked fourth among the dozen or so stock brokerage houses.

"I think ... one of things that allowed us to grow is that we first focused on institutional clients and, of course, the relationship with Life of Jamaica doesn't hurt at all. LOJ is probably the largest equity fund manager in the country. So between LOJ and ourselves (as Sigma) it provided a good base from which to launch," Perkins told Sunday Business. Life of Jamaica owns just over 50 per cent of PCFS's stockholdings.

Once the retail operations is up and running, Perkins expects the stock brokerage to perform well. "We have five branches and a huge portfolio of individual clients who are trading elsewhere and really will bring their business to running and us once we have the retail brokerage up. That, in itself, is a pretty big chunk. Our intention is to grow. We like to compete. It is important for us to move up the ranks. That's where clients benefit from. If we didn't have a competitive environment clients would not get the best pricing."

But, he acknowledged the challenges ahead given the lacklustre equities market. "We are constrained by the market. Right now the volumes are thin and there is very little interest on the buy side. You can project but you are projecting in a market which is somewhat out of your control."