Growth in the US market resulted in improved performance for the Unit Trust Corporation (UTC) for the first quarter of 2019 according to Nigel Edwards, Executive Director, UTC.
“A couple of our funds are invested in the US market and so the US market was on an increase for the first quarter and we saw the benefits of that in terms of the first quarter. In the fourth quarter of 2018, the US markets fell dramatically and there was a reduction in the overall market to market or net change in Fair Value in the US market. In two of our funds the US investments represent about 15 per cent of the investments so there were significant movements and in no small way driven by the US Stock Exchange,” he said.
Two weeks ago, the UTC held its 37th Annual General Meeting and released its annual report for 2018 in which it reported a loss for the first time since it because a group. Following the AGM, Edwards told the Guardian that the UTC Group loss was just over $33 million last year.
Edwards said for the rest of 2019, the UTC Group intends to maintain the gains it has made for the first quarter.
“The strategies that we are employing for the rest of 2019 will be centered around risk management and ensuring that we maintain the gains that we have made so far.”
Edwards said that the UTC is not worried when there is a dip in their quarterly performances.
“In the first quarter of 2018, we had losses of $154 million in fair value changes while in 2019 those same Fair Value Changes numbered $268.7 million. This is going to become a very important line item for the Corporation going forward. From time to time, from day to day, quarter to quarter there will be changes in the value of the securities that are invested in. The price of equities will change on a day-to-day basis.”
He also said there are daily changes in how markets operate and so if there are losses or gains, the UTC does not let it distract form its longer-term goals.
“Philosophically, the UTC is far more concerned about the long term value of its investments. So when we make an investment, we make an investment based on what we see as the fundamental value and the fact that the price may go down on one day, or go up the next day does not necessarily cause us to sell or to buy. Markets will change day to day. We are not going to be driven by those day to day changes.”
Edwards spoke to the Guardian on Monday at UTC’s office, Port-of-Spain.
He explained how the UTC is structured which is different from companies that must generate dividends for shareholders.
“The UTC is set up as a container that holds a series of funds. Inside of this body, there is the Growth and Income Fund, the TT Dollar Income Fund. The UTC is the entity that provides services to the individual funds. Unlike many other financial institutions in T&T like banks, the Corporation does not have shareholders and so if we were another financial institution then one of the things that we would be driven by is what is our reporting profits to our shareholders because they want to see dividends and dividends come from profits. In our case it is different, we are set up so that we can maximize the amount of value that we create inside the individual funds.”
While profits are important, he said it is not the primary focus of the UTC.
“The more profits the Corporation makes, the less the unitholders are making. I do not want to give the impression that making profits in the Corporation is a bad thing because it is important for the Corporation to ensure its longevity and that you do have some level of reserves. The reserves are now at TT $1.4 billion. When you look at the way that we are set up it is far less of a requirement for us to be generating additional profits inside the Corporation. We do not have shareholders that demand dividends. Our primary concern is maximizing the value to our unit holders,” he said.