The ANSA Merchant Bank's TT Dollar Income Fund has attracted some $235 million in new funds for the period January 1 to October 5, far outstripping the new funds attracted by the financial institution's US Dollar Income Fund, which received US$10 million (about $64 million) in the same period, says Varun Maharaj, executive director, ANSA Merchant Bank Ltd.
"There are people who want to hold US dollars and they are investing in US dollars, depending on where they see the TT dollar going. We have seen more people this year showing greater confidence in the TT dollar as compared to the US dollar, because we have seen more flows into our TT fund than our US fund," Maharaj said.
Despite the slowdown in the economy, Maharaj said demand for the two funds is continuous. Investment in the US income fund, he said, is done in US-denominated paper which could be from anywhere in the world.
When investors speak about paper, they refer to an unsecured, short-term issued debt security by a corporation. It is a popular investment with mutual funds. It is usually issued in large denominations (over US$250,000) and has a maturity of less than 270 days (nine months), with most maturing within one or two months of issue. It is a highly liquid investment and forms part of the money market. It is often simply called paper.
What is the biggest challenge in operating these funds?
Maharaj replied: "Finding paper (investments) more so on the T&T side. For 2012, when we look out there (in the international environment) and see what is happening over the last nine months, the Government has only had two bond issues. If you were to look at the equity side, the Government has been speaking about divesting companies in T&T, we haven't seen that occurring up to today," Maharaj said.
With so much instability in the economies in the Eurozone, and the high rate of unemployment in the United States, is the regional market an option for investment?
He said: "We have our concerns about the regional market. We are a very conservative house and we analyse risk very carefully and clinically. I am not comfortable, given the products we offer and how we manage the products, with the credit that is offered up the islands in terms of fixed income paper."
According to Maharaj, the euro fund is more suited to the individual who is interested in saving for a longer-term period.
"We sell this euro fund to people who are willing and interested in holding euro-denominated-assets. It could be that you have some aspirations to send your children to France or to some other European continent to study. We have some people here (in Trinidad) who want to retire in Europe because they are originally from there and they want to build their savings in euros; that's the purpose of this fund," Maharaj said.
Industry's star performer
Labelling ANSA Merchant Bank as "the star performer" in the industry, Maharaj said the euro fund has given a return of 3.5 per cent in the first quarter of 2012. But Maharaj said due to the instability in the Eurozone, the fund is being closely monitored.
"I still believe that the euro will be around, five, 10 years out, could be not in its present configuration. If we see anything happening untoward, we will inform investors that we think they should liquidate. We have kept regular contact with the investors and we have informed them about the outlook on the euro, they have indicated to us that we wanted to hold euros, we want to ride it out and see what is happening."
According to Maharaj, ANSA Merchant's funds have daily liquidity and if the investor wanted to exit the fund in under one year, there would not be any one per cent exit fee. So you come in today and an emergency arises and you have to come out tomorrow, you can come out. It is managed in that way.
"There is no upfront charge and no backline charge. We believe what we are willing to bear on the market is the knowledge on the investment market and how best we can manage money. We want you (the investor) to benefit from that, if we do a good job, I think you should reward us with that."
We have done better than the norm.
That's the declaration from as he gave an update on the performance of the company's US dollar, TT dollar and euro income funds.
Maharaj was speaking to the Business Guardian at ANSA Merchant's office, ANSA?Centre, Maraval Road, Port-of-Spain.
"Taking the most recent results, in terms of the 12-month trailing performance/trend, (which is the performance of the company in the last 12 months) in terms of our TT dollar income fund, we have returned a total return of (between) five and 5.5 per cent. The US dollar fund-7.5 per cent.
"I don't think you can find another investment vehicle similarly structured in the TT environment that could return you 5.75 per cent," Maharaj said.
Looking at its unaudited statement of financial position for the six months ended June 30, 2012, the net asset value (NAV) of the three income funds was at $520.1 million. NAV is the value of ANSA Merchant's assets less the value of its liabilities in relation to mutual funds. The NAV figure for the six months ended June 30, 2012 can be compared to the unaudited statement of financial position for the six months ended June 30, 2011 which stood at $502 million.
Cash flow increased for the six months ended June 30, 2012 according to ANSA Merchant's unaudited statement of cash flows. Cash at bank increased to $39.7 million for the six months ended June 30, 2012 compared to the six months ended June 30, 2011 where cash flow stood at $17,976,000.
In its US income fund, ANSA Merchant reported in its unaudited statement of financial position for the six months ended June 30,2012 that NAV was at $100.13 compared to a NAV of $100.12 in its unaudited statement of financial position for the six months ended June 30, 2011.
ANSA Merchant's total assets as at December 2011 was valued at $5.4 billion.
"There are people who want to hold US dollars and they are investing in US dollars, depending on where they see the TT dollar going. We have seen more people this year showing greater confidence in the TT dollar as compared to the US dollar, because we have seen more flows into our TT fund than our US fund," Maharaj said.
Steady demand
Despite the slowdown in the economy, Maharaj said demand for the two funds is continuous. Investment in the US income fund, he said, is done in US-denominated paper which could be from anywhere in the world.
The $TT Income Fund:
Initial investment: $25,000 minimum Additional investment: $5,000
The potential asset allocation is divided among government bonds, corporate bonds and cash and money market instruments.
The $TT Income Fund is appropriate to invest in if the investor has $TT funds and "wants to earn stable, healthy returns."
The investors time span for investing should be a short- to medium-term investment horizon.
The $US Income Fund:
Initial investment: US$3,000 minimum Additional investment: US$500
The potential asset allocation is divided among government bonds, corporate bonds, emerging market bonds and cash and money market instruments.
The $US Income Fund is appropriate to invest in if the investor has $US funds and "wants to earn stable, healthy returns."
The investors time span for investing should be a short to medium term investment horizon.