bourse weekly review - 24 january 2011 - mutual fund review

8/7/2019 Bourse Weekly Review - 24 January 2011 - Mutual Fund Review

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BOURSE SECURITIES LIMITEDWeekly Market Review

January 27th, 2011

USD Mutual Funds perform

The financial year 2010 held positive fortunes for the majority of locally-sponsoredmutual funds, with the international equity funds outperforming the regionally-focusedequity mutual funds. Accordingly, all but one of the US$ equity mutual funds appreciatedover the year, while very few regionally-invested funds posted negative returns. Thisweek we present a comparison of the performance of some of the major equity mutualfunds in 2010. Investors should note that no two funds are alike and within a region thecountry mix may vary based on the investment strategy and chosen benchmark for eachfund.

TT$ Equity Mutual Funds

The TT Composite Index made a surprising rebound, increasing 9.19 per cent in 2010. InJamaica, the equity market showed improvement as the JSE Market Index in USD termsgrew 6.76 per cent for the year. Across in Barbados, the Barbados Composite Indexcontinued its downward trend, falling 14.12 per cent in 2010.

Results for the TT$ equity mutual funds examined at the end of the year were mixed.Table 1 outlines the returns on these funds as at December 31st.

TT$ EQUITY FUNDS - CAPITAL GROWTH YTD RETURN

Republic Caribbean Equity Fund 7.17%

Savinvest Capital Growth Fund -0.12%

TT$ EQUITY FUNDS - INCOME & GROWTH YTD RETURNAIC TT Income & Growth Fund 9.64%Roytrin TT$ Income & Growth Fund 7.30%FCB Immortelle Income & Growth Fund 4.20%UTC TT$ Growth & Income Fund -1.55%

GAM Pan Caribbean Balanced Fund - Class A & B -1.64%TT$ EQUITY FUNDS - GLOBAL YTD RETURN

AIC TT Global Equity Fund (Caribbean Equity Fund) 9.21%Source: Mutual Fund Sponsors; Bourse

TABLE 1: TT$ EQUITY MUTUAL FUNDS

In the Capital Growth space, Republics Caribbean Equity Fund gained 7.17 per centwhile the Savinvest Capital Growth Fund declined 0.12 per cent.


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In the Income and Growth fund category, AICs TT Income and Growth Fund had thelargest increase with a return of 9.64 per cent in 2010. Roytrins TT$ Income and GrowthFund was up 7.30 per cent for 2010, while First Citizens Immortelle Income & GrowthFund gained 4.20 per cent. UTCs TT$ Income & Growth Fund was down 1.55 per cent

while GAMs Pan Caribbean Balanced Fund Class A & B declined 1.64 per cent.

AICs TT Global Equity Fund appreciated 9.21 per cent for the year.

US$ Equity Mutual Funds

Table 2 shows the performance of an array of US$ Equity Mutual Funds categorized bygeographic focus and investment style.

INCOME & GROWTH YTD RETURN

Roytrin US$ Income & Growth Fund 10.77%GLOBAL YTD RETURN

GAM New Economy Equity Fund - Class A & B 3.38%

NORTH AMERICA YTD RETURN

GAM North American Equity Fund - Class A & B 12.41%UTC North American Fund 5.38%

Savinvest US$ Capital Growth Fund 0.57%

EUROPE YTD RETURN

GAM European Equity Fund - Class A & B 1.24%

UTC European Fund -1.21%LATIN AMERICA YTD RETURN

UTC Latin American Fund 5.34%

ASIA PACIFIC YTD RETURN

GAM Asia Pacific Rim Fund - Class A & B 10.67%Savinvest India Asia Fund 10.20%

UTC Asia Pacific Fund 3.33%

BRIC YTD RETURN

GAM BRIC Equity Fund - Class A & B 6.19%

ENERGY YTD RETURNUTC Energy Fund 6.98%

TABLE 2: US$ EQUITY MUTUAL FUNDS

The only US$ Income and Growth fund, the Roytrin US$ Income and Growth Fundgained 10.77 per cent in 2010.


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GAMs New Economy Equity Fund Class A & B gained 3.38 per cent in the sameperiod. Its benchmark, the S&P Global 100 Index was up 2.68 per cent for the period.

As US markets recovered with the benchmark S&P 500 Index rising 12.78 per cent, thethree locally sponsored North American Funds were all up for the year. GAMs North

American Equity Fund gained 12.41 per cent while UTC North American Fund was up5.38 per cent. The Savinvest US$ Capital Growth Fund ended the period with a gain of0.57 per cent.

The MSCI Europe Index rose 8.04 per cent in 2010 as European equities responded to animproving economic outlook. GAMs European Equity Fund Class A & B appreciated1.24 per cent for the year while UTCs European Fund declined 1.21 per cent.

The Latin American market, as measured by the MSCI Latin America Index advanced12.07 per cent. In the Latin American space, the UTCs Latin American Fund had acapital appreciation of 5.34 per cent.

Other emerging markets, such as Asian giants India, also experienced significant returns.Asias regional benchmarks, the MSCI Asia ex Japan and the MSCI Pacific Indices rose16.99 and 37.18 per cent respectively for the year. GAMs Asia Pacific Rim Fund ClassA & B has a return of 10.67 per cent. For the same period, the Savinvest India Asia Fundgained 10.20 per cent and UTCs Asia Pacific Fund rose 3.33 per cent.

Brazil, Russia and India continued to outperform world markets, with the MSCI BRICIndex gaining 7.25 per cent for 2010. GAMs BRIC Equity Fund Class A & B posted areturn of 6.19 per cent for the year.

The sole local energy-related fund was able to benefit from recovering commodity pricesin 2010, the UTCs Energy Fund appreciated 6.98 per cent at the end of the year.

Outlook

The local economy may be challenged going forward. Even though the equity market

gained 9.19 per cent in 2010, fundamentals suggest that the Index could decline in 2011.

Weak economic conditions both locally and regionally may limit growth in corporate

earnings.

On the international front, the key question for 2011 is whether there is enough growth inthe global economy to continue to smooth over the relative imbalance in growth amongst

the major regions. Analysts are relatively optimistic and looking for around 4 per cent

global GDP growth to drive double-digit earnings growth and similar upside for stocks.

European earnings are seen as a play on global growth and earnings growth of 14 per cent

is expected in European companies next year.


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In the United States, according to a recent Bloomberg survey of 63 economists, the U.S

economy will grow by 2.5 per cent in 2011. Bloomberg estimates that earnings growth of

13 per cent for 2011.

According to the International Monetary Fund (IMF), Emerging and Developing

Economies will grow 6.4 per cent in 2011. By comparison, Advanced Economies areanticipated to grow 2.2 per cent in 2011.In Asia, Morgan Stanley forecast the MSCI Asia

Pacific excluding Japan Index to climb 20 per cent by years end, while Deutsche Bank

sees the index rising 20-30 per cent for the year. It is expected that Asian stocks could

deliver superior returns in the midst of global economic recovery and strong earnings

growth.

Looking ahead, the domestic equity market is expected to be subdued and as suchinvestors may want to consider investments in the international markets, where theoutlook for economic growth and higher corporate earnings is likely.

Note: For the purpose of this article, the benchmarks used are indicative of the region

and may vary from the actual benchmarks used by the individual funds.The returnswere provided to us by the Mutual Fund providers or calculated from information

provided to us by these Mutual Fund providers.

This report is for informational purposes only and does not constitute an offer or solicitation to buy or sell

any securities discussed herein. The information and any data contained herein have been obtained from

financial data provided to us by the issuers of the subject securities. Investors wishing to purchase any of

the securities mentioned should consult an investment adviser. Projections and estimates are those of

Bourse Securities based on current available information.

E-Mail us at [email protected] or phone 628-6204/3982/9100

bourse weekly review - 24 january 2011 - mutual fund review

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