Home' Trinidad and Tobago Guardian : October 18th 2015 Contents SBG16 FINANCE
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 18 • 2015
Over the course of the last
35 years, the T&T Stock
Exchange has evolved
and now boasts many of
the key companies which
drive the growth and
development of our local economy. The
T&T Unit Trust Corporation (TTUTC),
therefore, views the launch its Calypso
Macro Index Fund as a surgical insertion
in to the financial landscape. It would be
appropriate to examine the fund and, in
the process, reflect on some of the basics
of index investing and how the passive
investing approach can benefit the rank
and file investor.
What is an index?
An index is a way of measuring and
tracking changes in an economy or a secu-
rities market. It is typically a portfolio of
securities which is assembled together to
represent a geographic region, sector or
portion of a market.
What is an index fund?
An index fund is simply a group of assets put
together to track a particular market, geographic
region or sector. These funds require limited man-
agement and so the related management fees for
index funds are typically lower than those of mutual
funds. However, the risks associated with index
funds are similar to that of the assets which they
Index investing makes it possible to shift the
power of portfolio management from financial insti-
tutions to the retail investor. Through the appropriate
use of index funds the average investor can take
passive but broad investment exposure in various
geographic regions and economic sectors at a low
By simply acquiring several index funds, the
investor would be able to establish on his/her own
a viable portfolio of securities. Therefore what may
have once been a complex portfolio management
function can now be achieved through one simple
order to your stockbroker.
What are the benefits of index investing?
One of the major benefits of index investing is
diversification. Diversification is a way to reduce
the probability of loss in your portfolio by spreading
the risk among many securities. Thus if one of your
assets does not perform, it would be compensated
by the positive performance of the other assets in
Another great benefit of index investing is its low
cost. Traditionally a mutual fund would have a man-
agement fee ranging between one per cent and two
per cent. However, the management fees charged
by index funds are generally less than one per cent
as the objective of the fund is merely to track the
With indexing, the power of portfolio management
is handed over to the investor. The investor can now
choose which asset class, geographic region or sector
he would like to hold and change the portfolio to
suit, through the purchases and sales of various
'Buy the market'
The launch of the fund will now enable local
investors for the first time to own the local All T&T
Index with a single purchase, and follow a passive
indexing investment strategy. With the purchase of
a single security---a unit of the Calypso Macro Index
Fund---investors will automatically own a wide cross-
section of local stocks.
Local investors will also have the opportunity to
utilise TT dollars to access equity exposure in the
energy sector, and do so on a widely diversified and
The fund will be listed on the TTSE. Prior to
listing there will be an initial public offering (IPO)
from now till November 6, 2015. The fixed number
of units on offer (20 million) and limited tenor of
the fund (10 years) makes the fund a closed-end
fund. The 0.50 per cent management fee for this
fund is in line with the fees charged by other inter-
national index funds.
The minimum initial investment is $1,000 and
a unit will be priced at $25.
As this is the first time a UTC fund will be listed
on the local stock exchange, units of the Calypso
Macro Index Fund can only be bought or sold through
a stockbroker. By doing so, the UTC is empowering
and encouraging unitholders to diversify their port-
folios by not only holding broad T&T exposure but
encouraging investors to open brokerage accounts
to go on to owning additional local stocks.
For the local capital market, the Calypso Macro
Index Fund represents an opportunity to keep TT
dollars at home and invest in companies that drive
the local economy. It cements T&T as the financial
capital of the Caribbean.
Investors 'buy the market' with new fund
Links Archive October 17th 2015 October 19th 2015 Navigation Previous Page Next Page