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Sunday, February 23, 2025

Govt with­draws US$209.56M

HSF's net asset value dips

by

Andrea Perez-Sobers
130 days ago
20241016
Finance Minister Colm Imbert presents the 2025 budget in Parliament on September 30, 2024.

Finance Minister Colm Imbert presents the 2025 budget in Parliament on September 30, 2024.

OFFICE OF THE PARLIAMENT

The to­tal net as­set val­ue of the Her­itage and Sta­bil­i­sa­tion Fund as at June 30, 2024, was US$5.76 bil­lion, a 2.32 per cent de­clined com­pared to US$5.89 bil­lion as of March 31, 2024.  

This was re­port­ed in the HSF’s quar­ter­ly in­vest­ment re­port for the pe­ri­od April 1 to June 30, 2024, which was pub­lished on the web­site of the Min­istry of Fi­nance yes­ter­day. 

It said of this to­tal, the in­vest­ment port­fo­lio was val­ued at US$5.75 bil­lion, while the re­main­ing por­tion was held in op­er­at­ing cash ac­counts to meet the day-to-day ex­pens­es that arise from the man­age­ment of the Fund.  

The re­port in­di­cat­ed that dur­ing the quar­ter, a to­tal of US$209.56 mil­lion ($1.41 bil­lion) was with­drawn from the Fund un­der sec­tion 15 of the HSF Act (2007) for the finan­cial year 2022 / 2023.  

“As­sets with­in the US short du­ra­tion fixed in­come man­date were liq­ui­dat­ed to meet the oblig­a­tion,” ac­cord­ing to the quar­ter­ly re­port. 

Sec­tion 15 (1) of the HSF Act states, "Sub­ject to sub­sec­tions (2) and (3), where the pe­tro­le­um rev­enues col­lect­ed in any fi­nan­cial year fall be­low the es­ti­mat­ed pe­tro­le­um rev­enues for that fi­nan­cial year by at least 10 per cent, with­drawals may be made from the Fund as fol­lows, whichev­er is the less­er amount: (a) ei­ther 60 per cent of the amount of the short­fall of pe­tro­le­um rev­enues for that year; or (b) 25 per cent of the bal­ance stand­ing to the cred­it of the Fund at the be­gin­ning of that year.

For the quar­ter that end­ed June 30, 2024, the re­port said the HSF’s in­vest­ment port­fo­lio re­turned 1.38 per cent, while its bench­mark in­creased by 0.77 per cent. Strong US eq­ui­ty mar­ket gains and the Fund’s rel­a­tive­ly high­er al­lo­ca­tion to the US core do­mes­tic eq­ui­ty man­date helped to dri­ve per­for­mance. This was aug­ment­ed by pos­i­tive con­tri­bu­tions from the fixed in­come man­dates and in­ter­na­tion­al eq­ui­ties. 

The re­port high­light­ed that the HSF out­per­formed by 61 ba­sis points when com­pared with its strate­gic as­set al­lo­ca­tion (SAA) bench­mark. 

“Rel­a­tive as­set al­lo­ca­tion po­si­tion­ing and ex­ter­nal man­agers’ ac­tive in­vest­ment de­ci­sions drove ex­cess re­turns. The HSF’s over­weight al­lo­ca­tion to eq­ui­ties and cor­re­spond­ing un­der­weight po­si­tion in fixed in­come was pos­i­tive for per­for­mance. In ad­di­tion, the Fund benefit­ted from the strong out­per­for­mance of ex­ter­nal man­agers’ strate­gies, most no­tably in the non-US core in­ter­na­tion­al eq­ui­ty and US core do­mes­tic fixed in­come man­dates,” the re­port fur­ther stat­ed. 

In Sep­tem­ber, Fi­nance Min­is­ter Colm Im­bert an­nounced that the cur­rent val­ue of the HSF stands at US$6 bil­lion.   

He said in June 2022, the val­ue of the HSF was US$4.7 bil­lion, which was at­trib­uted to in­sta­bil­i­ty in the in­ter­na­tion­al fi­nan­cial sys­tem at that time.  

"Now two years lat­er, be­cause of pru­dent man­age­ment, the val­ue of the HSF has in­creased to US$6 bil­lion, an in­crease of US$1.3 bil­lion,” the fi­nance min­is­ter said.  

The HSF's 2023 an­nu­al re­port said that the fund stood at US$5.39 bil­lion at the end of Sep­tem­ber 2023, a 14.4 per cent in­crease com­pared with the US$4.71 bil­lion at the end of Sep­tem­ber 2022.   

In the sum­ma­ry of the an­nu­al re­port, which was avail­able in May 2024, HSF chair­man Ewart Williams said the Fund re­turned 10.59 per cent for the 2023 fi­nan­cial year, "par­tial­ly re­cov­er­ing from the steep loss­es dur­ing the pre­vi­ous fi­nan­cial year, when the Fund de­clined 16.52 per cent." 


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