Pe­ter D Nep­tune

Shored up by a US$23 mil­lion in­jec­tion from RBC, Roytrin's TT and US dol­lar funds have been hold­ing its own just above its promised net as­set val­ue (NAV) of $25 and US$25, re­spec­tive­ly, since unit prices were float­ed last Mon­day. The an­nounce­ment in De­cem­ber to shift its mu­tu­al funds fixed pric­ing to a float­ing regime had tak­en some unithold­ers by sur­prise as con­cerns grew among in­vestors about the falling val­ue of the funds. Unithold­er Ram­jat­tan Khan said he had been un­easy about the in­vest­ment since the re­gion­al bank was bought out by the Cana­di­an fi­nan­cial group, RBC, in June 2008. Khan said de­spite the low­er as­set base, Caribbean banks seem to be in a much stronger po­si­tion and were bet­ter reg­u­lat­ed than North Amer­i­can banks.

"Many North Amer­i­can banks have re­ceived huge sup­port from their gov­ern­ments just to re­main in busi­ness, and I am not so sure they are equipped or fa­mil­iar enough with our cul­ture and way of in­vest­ing to re­al­ly give us the kinds of re­turns and in­vestor sup­port we are look­ing for. "Our cul­ture is more of 'buy and hold,' and we get sta­bil­i­ty by know­ing the val­ue of our in­vest­ments with cer­tain­ty. We are look­ing at the re­ces­sion ex­tend­ing for at least a few more months, and this can mean con­tin­ued de­cline in the val­ue of our in­vest­ment. This is some­thing many in­vestors will not take light­ly. "In ad­di­tion, for many of us who are ap­proach­ing re­tire­ment age, the ad­di­tion­al risk and down­side for this in­vest­ment will make it less at­trac­tive than be­fore." Khan said since CL Fi­nan­cial's ap­peal to the Gov­ern­ment for a fi­nan­cial bailout in Jan­u­ary 2009, he has been more metic­u­lous about re­search­ing his in­vest­ments op­tions.

Khan said he con­sid­ers the CL Fi­nan­cial cri­sis to be a "wake-up call" and a close shave for in­vestors. As he ap­proach­es re­tire­ment, he has de­cid­ed to be more con­ser­v­a­tive with his as­sets. Khan even­tu­al­ly se­lect­ed a mu­tu­al fund that pro­vid­ed a gov­ern­ment guar­an­tee on his cap­i­tal. "The RBTT funds do not pro­vide this guar­an­tee, and with the prospect of the fund mov­ing much fur­ther south be­fore it be­gins its up­ward climb, it has be­come much less at­trac­tive to me as an in­vestor," he added. Suresh Sookoo, chief ex­ec­u­tive of­fi­cer, RBTT, said in a pub­lished no­tice last De­cem­ber that over the past 18 months, vir­tu­al­ly all fi­nan­cial in­sti­tu­tions faced dif­fi­cult con­di­tions as a re­sult of the eco­nom­ic cri­sis, which has gripped the world–and unit val­ues are be­ing af­fect­ed by this trend.

RIGHT: Suresh Sookoo, chief ex­ec­u­tive of­fi­cer, RBTT.

"RBC's di­ver­si­fi­ca­tion of its busi­ness and risk man­age­ment ca­pa­bil­i­ties has al­lowed the Roy­al Bank of Cana­da to fare very well through this tough cy­cle-ris­ing in in­ter­na­tion­al rank­ing to be­come the 13th largest fi­nan­cial in­sti­tu­tion in the world, and to be recog­nised as one of the most well-cap­i­talised, well-man­aged fi­nan­cial in­sti­tu­tions around the globe." Sookoo said based on this, the lo­cal bank will get the fi­nan­cial sup­port to take the Roytrin In­come Funds to an in­ter­na­tion­al stan­dard while en­sur­ing that unithold­ers in­vest­ments re­main un­af­fect­ed to De­cem­ber 31, 2009. This will al­so give in­vestors the op­por­tu­ni­ty to as­sess their in­di­vid­ual in­vest­ment op­tions and choic­es with no risk to their own cap­i­tal and con­sid­er ap­pro­pri­ate in­vest­ment choic­es go­ing for­ward, Sookoo said.

In a No­vem­ber 20, 2009, no­tice to Roytrin in­vestors, Sookoo said RBC pro­vid­ed the port­fo­lio man­ag­er with a US$23 mil­lion cash in­jec­tion. This will pro­vide the time and liq­uid­i­ty to con­tin­ue to ef­fec­tive­ly po­si­tion the port­fo­lio of as­sets to gen­er­ate strong in­come re­turns be­yond Jan­u­ary 4. He said the close of busi­ness on Jan­u­ary 4, will be the first time the net as­set val­ue sys­tem will be used to val­ue the units. Sookoo said in the De­cem­ber state­ment that the change to a float­ing sys­tem was im­por­tant and this prac­tice, which has been used in more ma­ture fi­nan­cial mar­kets over many years, has added val­ue in many ways, in­clud­ing pro­vid­ing trans­paren­cy for in­vestors.

"It doesn't take too much ef­fort to cite re­cent in­ter­na­tion­al ex­am­ples where a lack of trans­paren­cy has cost in­vestors a great deal of mon­ey. In the Unit­ed States, the fi­as­co of the Ponzi scheme run by Bernie Mad­off, where, it seems, in­vestors' mon­ey wasn't be­ing in­vest­ed at all, is the ob­vi­ous one that comes to mind. "In­vestors have the right to ex­pect full and com­plete dis­clo­sure of in­for­ma­tion and should nev­er be lulled in­to com­pla­cen­cy which im­plies 'it's OK, trust me', when that trust is not backed by the true, dis­closed val­ue of the as­sets of the fund. "World-class in­vest­ment man­age­ment ca­pa­bil­i­ties are ev­i­denced by full and com­plete dis­clo­sure and em­ploy ef­fec­tive val­u­a­tion meth­ods in ac­cor­dance with in­ter­na­tion­al fi­nan­cial re­port­ing to ef­fec­tive­ly man­age their clients' mon­ey with in­tegri­ty and trans­paren­cy.

"We are not at lib­er­ty to dis­close fig­ures; how­ev­er, what we can say is that the vast ma­jor­i­ty of the unit hold­ers who opt­ed out of the in­come fund moved their funds to oth­er RBTT in­stru­ments such as fixed de­posits, sav­ings ac­counts and oth­er types of sav­ings ac­counts." Sookoo said this move to a float­ing unit pric­ing regime is im­por­tant be­cause it will con­tribute to the mat­u­ra­tion of the lo­cal fi­nan­cial sec­tor. "As T&T par­tic­i­pates more in the in­ter­na­tion­al fi­nan­cial are­na, I be­lieve our reg­u­la­to­ry frame­work and our day-to-day prac­tices will move in tan­dem to­wards in­ter­na­tion­al stan­dards and prac­tices right here at home."