The net asset value of the Heritage and Stabilisation Fund (HSF) grew from US$2,888 million to approximately US$2,964 in 2009 solely due to interest payments, says Samuel Martin, Chairman of the Fund. "Given the difficulty experienced in the global economy, oil prices slumped as aggregate demand for the commodity waned." He said as a result, for the period that there were no deposits to the Fund. He was also pleased to report that there were no withdrawals requested by the Government even though the requirements for withdrawal were met, with a larger than expected drop in tax revenues. Martin made his comments in the Annual Report of the HSF which was laid in Parliament yesterday. According to the report, the HSF ended the year with 20 per cent of its assets invested in international equities, 41 per cent in international fixed income securities and 39 per cent in money market deposits.
"Through close monitoring and by seizing the available opportunities offered, we were able to escape the negative returns of some of the major sovereign wealth funds in the first nine months of the fiscal year." The Report also stated that like most sovereign funds, the T&T HSF experienced a mixed fiscal year for 2009. "During the first half of the fiscal year (October 2008 to March 2009) investors witnessed a continuation of the global turmoil which was characterised by unprecedented levels of volatility in international financial markets. "The uncertainty arising from the collapse of Lehman brothers in September 2008 carried over into October, stoking investors' fears and threatening the collapse of the global financial markets." The report further stated that HSF took a very conservative stance in the first half of the year by focusing on the preservation of capital and not returns.
"Over this period, the fund performance lagged marginally behind its benchmark. With signs of improvements in the international financial markets emerging in the latter half of the fiscal year, a decision was taken to commence the implementation of the Strategic Asset Allocation (SAA) for the Fund. "The investment strategy, which envisages a diversified portfolio of equities, fixed income and money market instruments managed mainly by foreign asset managers, began in August 2009." It also stated that most analysts anticipated that global economies would continue to expand over the next year as expansionary monetary policies provide much needed support. "Given the view that the recovery will be slow, the outlook for the year ahead, while improved, is not likely to see the rapid growth and returns of the past."