Many investors in the growing pool of equity-linked managed Funds are losing out on good returns being enjoyed by others in the Unit Trust industry because they fail to focus regularly eyes on their investment and compare the performance of their investment against others.
Investors wanting to enjoy stock market-like gains with reduced risk have several options, but paying attention to past performance can make a big difference between ordinary or excellent returns.
Investors should review the performance of their investment regularly at least once per year to see how well theirs stack up with similar forms of investment. This applies to stocks, Unit Trusts, money market instruments or any other forms of investment.
A good example is the long-term top unit trust performer Barita’s Capital Growth Fund that gained the most for the year to September, with an increase of 43.15 percent, outperforming by far the 23.69 percent posted in the corresponding period in 2018. The Fund’s twelve-month growth was an attractive 52.67 percent, the highest of all the local equity Funds.
New kid on the block JN Mutual Funds Global Equity Fund holds the number 2 spot with growth of 35.91 percent to October 2 and gained just over 31 percent for the last twelve months, followed by 
Sagicor Investments’ Sigma Equity Fund with, growth of 31.31 percent and sits at number 3 for 2019 to date but that is lower than the 36.47 percent at the similar point in 2018. VM’s Wealth Classic Equity Growth portfolio is the fourth-best performing Fund in 2019 with a gain of 29.78 percent and is significantly up on the 16.42 percent increase in the 2018 period. NCB’s E Fund is next with 29.26 percent for 2019, a huge turnaround compared to last year’s mere 2.96 percent gain.
Barita’s Capital Growth Fund that led the pack with growth for the twelve-month period is followed by Sagicor’s Sigma Equity Fund with 39.84 percent and in third place, VMWealth Classic Equity with 33.96 percent.
Scotia Premium Growth Fund delivered a 23.14 percent growth while JMMB Income & Growth Fund had gains of 22.64 percent for the nine months to September. Sigma Global Venture Equity Fund delivered gains of 18.22 percent for the year to September and 17.60 percent for the 12 months.
The bottom three performing equity Funds for the year to September are JN Global Diversified Income with 11.26 percent growth and a twelve-month growth of 9.10 percent as of October 2, JMMB Optimum Capital generated just 15.7 percent gains for the nine months, and 11.44 percent for the past 12 months.
The three best performing Funds, Sagicor’s Sigma Equity, Scotia’s Premium Growth and Barita’s Capital Growth, have been and continue to outperform the other players in the market over the long term, despite encountering periodic blips in their performance due to local and external economic conditions.
For the past 5 years to the end of 2018, the three best performing Funds were Sagicor’s Sigma Equity, Scotia’s Premium Growth and Barita’s Capital Growth, and for the 10 years to 2018, the same three Funds have been the top performers.
Sagicor Fund is Jamaica’s top unit trust
Sagicor Equity linked Unit Trust delivered almost 600% gain in 10 years.
Sagicor Equity Unit Trust is Jamaica’s leading unit trust equity portfolio for the past six and ten years periods. In second place is Scotia Unit Trust, followed by Barita, data compiled by IC Insider.com shows.
For the past 6 years, Sagicor delivered gains of 339 percent and 581 percent over the past 10 years with nearly three months to go for the period. Scotia Unit Trust had gains of 237 percent for the near 6 year period and 429 percent for the 10 year, period with just under three months of the period to go. Barita is third with 341 for the near ten years and 209 for the 6 years period.
The Jamaica Stock Exchange main market gained 31 percent to Friday October 12 and the Junior Market 23 percent and the year still has more than 2 months to go. At look at the unit trust performance as disclosed in Friday’s Financial Gleaner, dated October 12, shows, Barita Unit Trust leading all others with an increase of 29.77 percent followed by Victoria Mutual Fund with a return of 25.28 percent and Sagicor coming in third at 18.95 percent.
Scotia Investments Capital growth Fund tops in 2017.
With interest rates at the lowest levels on record and the increased risk for ordinary Jamaicans to invest in US dollars with two ways movement of the local currency, more persons are looking at the stock market as a viable alternative. Not everyone is equipped to buy stocks directly. Equity based unit trust schemes are useful alternatives for investors to look at if they are not comfortable with investing directly in stocks listed on the local market. These schemes invest in a variety of stocks and keep some funds liquid to be able to meet persons cashing out. This latter factor alone usually ensures that unit trust will find it tough to beat the market. But that should not be of major concern to many investors who would not be able to benefit from the power that stocks can deliver to one’s portfolio. Put another way if an individual investors decided that they are not conversant with stocks and therefore invested their funds in fixed interest securities at say 5 percent per annum but got say 20 percent from a stock fund as opposed to 30 percent from the stock market they would still be far better off than not owning some instruments that are exposed to the stock market.
One period’s performance is not the best guide to selecting a unit trust to invest in. In 2017, Scotia Premium Growth Fund recorded gains of more than 37 percent for their investors to be the number 1 performer, after rising 25 percent for 2016. The Scotia Fund, displaced Barita Capital Growth Fund, the 2016 front runner that ended at
number 6 in 2017, while still delivering a 21.5 percent return, down slightly from 26.7 percent in 2016. Funds delivering good performance over longer periods are far better guide in selecting a unit trust for investment.Over the past 5 years to 2017, no one unit Trust has been consistently the top performer. Barita has held number one spot in 2013 with 11.79 percent, they were number 2 in 2014 with 9.13 percent, three in 2015 with 51.27 percent and number one in 2016 with 22 percent but fell to 6th position in 2017 and are now number 1 in 2018. Scotia Premium Growth were no 1 in 2017, number 2 in 2016 with an increase of 26 percent, number 2 in 2015 with a 62.7 percent increase, 3 in 2014 with an increase of 8.3 percent, 3 in 2013 with a decline of 3.8 percent and are now 4 in 2018 to date. Sigma Unit Trust was number one in 2014 with a gain of 12.6 percent and in 2015 with 89 percent, number 4 in 2016 with negative 2.7 percent growth, second place in in 2017 and number 3 in 2018 so far.
Scotia Equity Fund tops at 39%
Scotia Investments Capital growth Fund tops in last 12 months.
Getting the best out of one’s investment requires regular reviews and sometimes changes to what we may consider prime holdings. A look at some of the high flying Jamaica Stock Exchange listings this year, tells the story pretty well.
The prices of many rose to exceedingly high valuations, on the back of strong buying, only to see prices fall back later with selling exceeding buying, as investors who bought low, offloaded their holdings, booking profit in the process.
That many may go on to recover losses incurred as a result of buying close to or near the top. In a number of cases, it may take quite some time to recover fully, while other opportunities to profit may go by. The Jamaica Stock Exchange share traded at $13.50 but now trades at $7 or Cargo Handlers trading at a high of $30, and is now at $16 and could fall some more with the price still seeming to be about 50 percent too high. Getting back to the top for these two will be challenging in the short term.
What then is happening to securities that move in a more mild-mannered than stocks but better than money market instruments? Unit trusts are a pooled investment vehicle that are managed by experienced persons.
Many persons only want to know that their investment grow at a reasonable pace and not so much on the rate of return, that will not be good stewardship of their resources. Investors should review their portfolio at least once per year and make changes where needed.
A close look at the Unit Trust bi weekly report that are published in the Jamaica Observer and Jamaica’s Daily Gleaner is revealing. Not all stocks are alike so it is with the pooled Unit Trust investment funds.
The performance of the Unit Trust funds vary from one to another. The equity based growth funds varied from 39 percent growth in case of Scotia Investments Premium Growth Fund, to a low of 28.47 percent for Sagicor Sigma Equity Fund for the last 12 months to date. Coming second, is Barita Investments Capital Growth with 34.55 percent. For 2017 to June 22, NCB Capital Markets equity fund delivered 29 percent for the last 12 months, but is the leading equity linked Unit Trust funds with gains of 21 percent, Scotia Investments Premium Growth Fund, is just behind, at 20.4 percent, edging out Barita Investments with 19.7 percent. JMMB Fund Managers landed 31 percent for the last 12 months and 18.9 percent since January with their Income and Growth Fund.
Sagicor and VM Unit Trust lag in the equity category, while Barita Investments FX Growth Portfolio fell 10 percent for the last 12 months and 5.7 percent since 2017 and the real estate fund, slipped 3 percent for the last 12 months and 5.7 percent for 2017 to date.
Returns on money market funds have been much more competitive with returns mostly around 5 percent annualized.
What is a Unit Trust?
Jamaica Unit Trust started the first unit trusts in Jamaica
Jamaican investors have been blessed with an array of investment opportunities right here in Jamaica, that they can make superior returns from. They just need to know where to look. An easy way, is to leave the choices up to professional managers to make the individual investment decisions.
The investment choices are many, some are quite simple to invest in while others required skills developed over time. For example the stock market may well be the market that delivers the highest returns, but investing successfully in stocks, requires knowledge about the workings of the market as well as a good assessment of the company to invest in as well as learning when to get in and out of a stock. On the other hand investing in Unit Trusts requires little knowledge of the assets the funds invest in, as the reliance should be placed on the management of these funds. In this regard the pass success over time is often a good indicator to be followed when investing in these funds.
An equity linked unit trusts are ideal for persons who want higher returns that the stock market offers without the having to do all the work in identifying the best stocks and the most opportune time to trade stocks, the same applies to fixed interest instruments.
What is a unit trust? Unit Trusts pool funds from numerous investors to invest in a variety of securities. The Trusts are governed by statutory regulations and their own trust deeds which set out the powers and limitations of the management of the funds. One major feature of unit trust is that of diversification of investments especially in the equities. This factor may reduce the growth potential of such funds but it acts as a great protection for investors. Local unit trust prices are quoted daily and are published in newspapers twice per week. The managers of these funds charge a fee for their services which is either taken out at the time of investment as well as an ongoing fee based on the size of the funds.
Upon till a few years ago, there are two main funds managed by fund managers these are equity or money market based. Fees can eat into the returns of investors especially in the case of money market funds. Recently, more funds were added, to include, real estate, foreign exchange and venture capital.
Returns on the money market funds should hover around rates paid on fixed interest securities less the fees the managers get.
When choosing funds to invest in, past performance can be a good guide but not always. Recent top performing funds could be the ones to look at first but it may be useful to look at a longer term period say the last 5 years to see how consistent management has been in delivering the returns. It is useful to determine what financial assets are in the fund at the time that investment is contemplated to see if they are appropriate.
Who are the persons behind the management decisions is the most important. An investment committee that makes decisions as opposed to an individual can make a big difference. Committees respond slowly to changes in market sentiments while individuals can move more swiftly but a committee may well protect against bad decisions. Size can make a difference in performance. A big fund is less nimble than a smaller one.
