prime income fund q2 2015 issue 11 - royalfidelity.com · such is the case currently with cable ......
TRANSCRIPT
Dec Net Asset Value: $5.0396
Assets: $42M
Inception: Nov-12 The local market appetite for fixed income securities contin-
ued unabated in Q2, as investors gobbled up new preference
share offerings from Cable Baha-
mas and Fidelity Bank as well as
another issue of Bahamas Gov-
ernment Stock (BGS).
The latest BGS offering—4%
for a 3-year maturity, 4.25% for
5 years, and 4.5% for 7 year—
was oversubscribed by 63%, and
netted the government $52M.
(The fact that Royal Fidelity—the placement agent for the issue—
was required to return $33M to investors due to the oversub-
scription simply highlights the ongoing demand in the local mar-
ket for higher yielding investment options.)
Assets in the Prime Income Fund have now reached an all-
time high at almost $86M, with more than $2M of new invest-
ment coming into the fund in Q2 alone. While this is a good thing,
it nevertheless places enormous pressure on the fund’s manager
to seek out and purchase additional securities for the portfolio.
And in a limited market such as ours—with more money than
options—this can lead to security concentration.
Such is the case currently with Cable Bahamas preference
shares, which now make up
more than a third of the overall
portfolio. Over time, of course,
this concentration will be less-
ened as new securities are added
to the portfolio. In the meantime,
however, coupons of 6.25% and
5.75% are welcome relief from
the low-rate desert we exist in
these days.
The fund managed to post a return of 1.23% for the quarter,
and 2.27% year-to-date through June. And assuming the investor
appetite for fixed income securities doesn’t diminish, we also plan
to participate in several other fixed income issues are scheduled
between now and the end of the year.
The Prime Income Fund is a sub fund of the Bahamas Opportunities umbrel-la investment fund, which began in November 2012. Performance shown is for Series 1, or retail, shares, which may differ from other Series offered in the fund. The asset allocation shown is subject to change without notice and at the discretion of the investment manager, subject to the restrictions outlined in the fund’s offering documents. Past performance doesn’t guaran-tee future success.
Fund Benchmark*
1 Month 0.33% 0.40%
3 Month 1.23% 1.19%
1 Yr 4.66% 4.75%
3 Yr n/a n/a
Prime Income FundPrime Income Fund
CABLE BAHAMAS PREF SHARES 6.25% 26%
CABLE BAHAMAS PREF SHARES 5.75% 10%
FBB SERIES F NOTES P+1.25% 30 MAY 2022 8%
ARAWAK PORT PREF SHARES 5.5% PREFS 6%
PUBLIC HOSP. AUTH. NOTES 6% SEPT-33 5%
* Bahamas Prime Rate
Investors indulge themselves
on new fixed income offerings
Performance:
Allocation:
Top Holdings:
Q2 2015 Issue 11
Jun Net Asset Value: $5.6348
Assets: $85.84M
Inception: Nov-12
Royal Fidelity Merchant Bank & Trust
51 Frederick Street
PO Box N 4853
Nassau, Bahamas
(242) 356-9801
www.royalfidelity.com
Royal Fidelity
Prime Income FundPrime Income Fund as of 30 June 2015
Royal Fidelity Mutual Funds * 51 Frederick Street Nassau, Bahamas * PO Box N 4853 * 242.356.9801 * [email protected] * www.royalfidelity.com
Top Five Fund Holdings
Investment Objective The primary objective of the fund is a high and steady rate of return with long-term preservation of capital.
Strategy The fund strives to achieve a rate of return in excess of the current Bahamian Prime Rate by allocating to a balanced portfolio of Bahamian fixed income securities, includ-ing Bahamas Government bonds, corporate bonds, and corporate preference shares.
Fund Features
Steady returns and low volatility;
Diversification among corporate & government bonds & preference shares;
Generally higher overall returns than fixed-term rates;
An investment should be considered long-term, generally at least five years.
Key Facts Investment Manager: Royal Fidelity Merchant Bank & Trust Portfolio Manager: Committee Inception: Nov 2012 Fund Currency: B$ Fund Assets: $85.84M Fund Type: Bahamian Fixed Income Min Investment: $1,000 Min Additional: $500 Dealing Frequency: Monthly Redemption Notice: 15th of each month Management Fee: 1.00% Redemption Fee: Declining Surrender Charge (DSC). Redemptions that occur within the period following initial invest-ment will incur the following charges:
0-24 months 2% 25-36 months 1.5% 37-48 months 1.0% 49-60 months 0.5%
Contact Details Royal Fidelity Merchant Bank & Trust Fidelity House 51 Frederick Street Nassau, Bahamas T: (242) 356-9801 F: (242) 326-3000 To find out more about this and our other funds, visit our website at www.royalfidelity.com
Fund Fact Sheet
Low Low-Med Med Med-High High
Risk Profile
Allocation
*The Royal Fidelity Prime Income Fund is a Bahamian Dollar mutual fund, registered with the Securities Commission of the Bahamas, and is not offered in any other jurisdiction.
The fund is a sub fund of the Royal Fidelity Bahamas Opportunities umbrella fund, and began October, 2012. Past performance is not a guarantee of future results and all potential investors should consult with a trusted advisor before investing.
CABLE BAHAMAS PREF SHARES 6.25%
CABLE BAHAMAS PREF SHARES 5.75%
GOV OF BAHAMAS BONDS 4.25% DEC-19
ARAWAK PORT PREF SHARES 5.5%
PUBLIC HOSP. AUTH. NOTES 6% SEPT-33