Home' Trinidad and Tobago Guardian : June 26th 2014 Contents BG8 NEWS
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2014 • WEEK FOUR
T&T s Heritage and Stabilisation
Fund (HSF) investment port-
folio returned 1.46 per cent for
the quarter ended March 2014,
compared with a return of 3.95
per cent for previous quarter
ended December 30, 2013, according to the
fund s 2014 first quarter report released June
"The fund s exposure to equity and fixed
income contributed positively to absolute
returns. At the end of March 2014, the net
asset value of the HSF was US$5.43 billion,
an increase from the US$5.35 billion reported
at the end of December 2013," the first quarter
2014 report said.
A total of 82.5 per cent of the HSF s approved
strategic asset allocation (SAA) investments is
in US securities. The report said the US econ-
omy has "continued to show signs of resilience
during the fourth quarter of 2013. Economic
activity as measured by real gross domestic
product (GDP) expanded at an annualised rate
of 2.6 per cent compared with a rate of 4.1
per cent in the previous quarter."
Though the rate of expansion of the US
economy was slower than the previous quarter,
it was still considered to be relatively robust,
the report said, given that growth was aided
by strong gains in personal consumption expen-
diture, non-residential investment and exports.
Over the period December 2013 to March
2014, the asset classes of the T&T HSF deviated
from their SAA, the report said, and the US
Core Domestic Equity mandate and the US
Core Fixed Income Mandate fell out of the
permitted (+/- 5 per cent) range.
"As at February 28, 2014, the US Core Fixed
Income Mandate had an allocation of 34.91
per cent, or 5.09 per cent below the SAA of
40.0 per cent. As at March 31, 2013, the US
Core Domestic Equity mandate had an allo-
cation of 22.56 per cent, which was 5.06 per
cent above the SAA of 17.50 per cent," the
Throughout the quarter, the two equity man-
dates carried overweight allocations relative to
their SAA weights and these resulted from
their stronger performance when compared
with their fixed income counterparts, the report
By the end of the quarter, the asset class
with the largest overweight was the US Core
Domestic Equity mandate while the US Core
Fixed Income mandate had the largest under-
"The total net asset value of the fund as at
the end of March 2014 totaled US$5,429.6
million, compared with US$5,354.7 million at
the end of the previous quarter. Of this total,
the investment portfolio was valued at
US$5,428.8 million, while the remaining portion
(US$0.8 million) was held in cash to meet the
day-to-day expenses that arise from the man-
agement of the fund," the report said.
For the first quarter of 2014, the HSF invest-
ment portfolio gained 1.46 per cent, compared
with a return of 1.30 per cent for the "SAA
benchmark" the report said.
"This outperformance of 16 basis points can
be attributed to favourable security selection
as well as the deviation between the portfolio
and SAA weightings," the report said.
The bulk of the HSF portfolio s returns were
generated by the fixed income portion of the
fund, which contributed 0.80 per cent to the
overall performance, while the equity mandates
added 0.67 per cent to the overall return, it
The report said that all investments, except
the US Core Fixed Income mandate contributed
higher returns than their respective benchmarks
during the quarter ended March 31, 2014.
The US Short Duration Fixed Income port-
folio posted an absolute return of 0.35 per cent
during the first quarter of 2014, outperforming
its benchmark, the Bank of America Merrill
Lynch US Treasury 1-5 year index, by 11 basis
points, the report said.
The benchmarks are not necessarily guided
by other sovereign wealth funds.
The report said "this outperformance" was
attributed to the portfolio s exposure to spread
products---residential mortgage-backed security
(RMBS) and commercial mortgage backed secu-
rities (CMBS)---and non-US government bonds
as spreads tightened during the quarter and
global government bond yields fell.
The net asset value of this mandate as at
March 31, 2014 was US$1,168.9 million, com-
pared with US$1,165.1 million at the end of
the previous quarter, according to the report.
The longer duration fixed income investments
which consist of US Core Fixed Income secu-
rities, posted a return of 2.06 per cent during
the first quarter of 2014, outperforming its
benchmark, the Barclays Capital US Aggregate
Bond index, which returned 1.84 per cent, the
The document said the outperformance of
this portfolio relative to the benchmark was
due to "its overweight allocations to the cor-
porate credit sector and to the CMBS sector."
The net asset value of this investment class
as at March 31, 2014 increased in comparison
to the previous quarter, totaling US$1.9 billion
compared with US$1.86 billion as at December
The smallest of the portfolios, the non-US
International equities mandate gained 1.30 per
cent for the first quarter of 2014, compared
with a return of 0.59 per cent for its benchmark,
the MSCI EAFE ex Energy index.
The report said this was thanks to "favourable
stock selection." The largest impact from stock
selection was recorded from holdings in Aus-
tralia, France, Switzerland, Germany and Fin-
land, the report said.
Additionally, stock selections within the
"consumer discretionary and utilities" sectors
also benefited the portfolio. The net asset value
of the non-US Core International Equity man-
date as at March 31, 2014 grew to US$1.13 bil-
lion, from US$1.12 billion at the end of Decem-
The "US Core Domestic Equities mandate"
returned 1.76 per cent, compared with a bench-
mark return of 1.99 per cent, the report said.
This underperformance, the report said, was
the result of "unfavourable stock selection and
sector allocation" by the fund managers during
The stock picks from the consumer discre-
tionary, financial services and healthcare sectors
were the weakest, the report said, adding that
"the stock selection within the aforementioned
sectors also detracted from performance over
the period. The net asset value of this mandate,
as at March 31, 2014, was US$1,224.6 million,
compared with US$1,203.8 million at the end
of December 2013."
T&T's wealth fund
now at US$5.43bn
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