GEISHA KOW­LESSAR ALON­ZO

An un­der­per­form­ing T&T stock mar­ket has led to the Unit Trust Cor­po­ra­tion (UTC) re­port­ing a de­crease of $38 mil­lion or 67 per cent for 2024, re­flect­ing a struc­tur­al is­sue for do­mes­tic stocks and the need to have more com­pa­nies on the mar­ket, says the UTC’s ex­ec­u­tive di­rec­tor Nigel Ed­wards.

At its an­nu­al meet­ing, which took place at the Na­tion­al Acad­e­my of Per­form­ing Arts (NA­PA) on Thurs­day, stake­hold­ers heard that net in­come for the year end­ed De­cem­ber 31, 2024 was $19 mil­lion com­pared to $57 mil­lion for the year end­ed De­cem­ber 31, 2023.

Ker­ri Ma­haraj, the UTC’s chief fi­nan­cial of­fi­cer out­lined the “prin­ci­pal dri­ver for the low­er per­for­mance was the neg­a­tive re­turns on the T&T Stock Ex­change—the All T&T In­dex ex­pe­ri­enced a 13 per cent de­cline in 2024.

He said the de­cline in lo­cal stocks con­tributed to a five per cent fall in the Growth and In­come Fund’s (GIF) net as­set val­ue (NAV) from $18.42 as at De­cem­ber 31, 2023 to $17.44 as at De­cem­ber 31, 2024.

“The NAV de­cline led to an in­crease in the price guar­an­tee li­a­bil­i­ty from $9 mil­lion to $86 mil­lion and a cor­re­spond­ing charge to the con­sol­i­dat­ed state­ment of prof­it or loss of $83 mil­lion,” Ma­haraj said.

In an in­ter­view with the Sun­day Busi­ness Guardian fol­low­ing the meet­ing, Ed­wards ex­plained how the re­duc­tion came about.

“Dur­ing this year, we had a re­duc­tion in our net in­come from $57 mil­lion down to $19 mil­lion. We want to em­pha­sise that re­duc­tion in net in­come is not in any way a re­flec­tion of lost val­ue. What it does re­flect is that we pro­vide a guar­an­tee to the hold­ers of our Growth and In­come Fund.

“The way that guar­an­tee works is that once you hold your in­vest­ment for more than three years, you will al­ways re­deem it at no less than the price that you paid for it, so you will suf­fer no loss. But that costs some­thing, and over the last year, the per­for­mance of the lo­cal stock mar­ket in par­tic­u­lar caused the Growth and In­come Fund to re­duce in val­ue. That re­duc­tion in val­ue re­sult­ed in us hav­ing to in­crease the pro­vi­sion to pay that guar­an­tee to $83 mil­lion. We had to pro­vide for an ad­di­tion­al $83 mil­lion in ex­pens­es to pay for that guar­an­tee some­time in the fu­ture. We don’t have to pay for it im­me­di­ate­ly, it’s a non-cash move­ment, but that’s what re­sult­ed in the re­duced net in­come.”

On what were these struc­tur­al is­sues which re­sult­ed in the de­cline, Ed­wards said, “There is a buy and hold cul­ture, and that buy and hold cul­ture is be­cause of the fact that most of the in­vestors on the Trinidad and To­ba­go stock mar­ket tend to be pen­sion funds, in­sur­ance com­pa­nies, peo­ple like the Unit Trust, and there is a con­cern that if you were to sell, you wouldn’t be able to buy it back. That re­duced trad­ing in stocks has meant that the mar­ket is vir­tu­al­ly non-ex­is­tent. So peo­ple are not sell­ing, and there­fore they’re un­able to buy and the prices have not been mov­ing ac­cord­ing­ly,” Ed­wards said.

Go­ing for­ward on how these struc­tur­al is­sues could be ad­dressed, Ed­wards said one of the things the UTC is do­ing is to in­vest in pro­grammes geared to bring en­tre­pre­neurs on­to the stock mar­ket, per­haps as a longer-term strat­e­gy.

“We need to get more in­vest­ment op­por­tu­ni­ties on­to the stock mar­ket. Medi­um-sized com­pa­nies, some of the fam­i­ly busi­ness­es that have been in op­er­a­tion for a long pe­ri­od of time, and some­times they need an ex­it be­cause the fam­i­ly mem­bers are in the sec­ond or third gen­er­a­tion.

“We’re en­cour­ag­ing some of those com­pa­nies to list on the mar­ket, to present op­por­tu­ni­ties for peo­ple like us and for in­vestors to par­tic­i­pate and to cre­ate the op­por­tu­ni­ty for the whole mar­ket to rise as a re­sult,” Ed­wards ad­vised.

Pressed on whether he be­lieved the lo­call stock mar­ket was weak or that lo­cal busi­ness­es lacked con­fi­dence in in­vest­ing in the mar­ket, Ed­wards em­pha­sised the big­ger is­sue around the stock mar­ket’s per­for­mance re­mains struc­tur­al.

“One of the things I’ve been look­ing at close­ly is the un­der­ly­ing per­for­mance of the stocks, for ex­am­ple, some of the banks. The banks are in­creas­ing their net in­come on an an­nu­al ba­sis so the net in­come is go­ing up, but their price is go­ing down.

“Some­thing isn’t right about that, and that tells you that it re­al­ly is a struc­tur­al is­sue. No­body is ex­press­ing a lack of con­fi­dence in the un­der­ly­ing per­for­mance of the en­ti­ties, and that’s why I be­lieve fun­da­men­tal­ly that it is those is­sues,” Ed­wards said.

He added it was more an is­sue of bring­ing more com­pa­nies on­to the mar­ket, cre­at­ing more liq­uid­i­ty, adding that the UTC is work­ing with oth­er in­sti­tu­tions to help to get more liq­uid­i­ty on­to the stock mar­ket.

An­oth­er chal­leng­ing year for lo­cal eq­ui­ty

Shar­ing some fur­ther de­tails dur­ing the dis­cus­sion seg­ment, the UTC’s chief in­vest­ment of­fi­cer Crys­tal Ro­driguez-Greaves al­so spoke about the un­der­per­fro­mance of the lo­cal stock mar­ket.

She ac­knowl­edged the lo­cal eq­ui­ty mar­ket has not been per­form­ing late­ly, not­ing that for the past three years there have been de­clines.

“Es­sen­tial­ly it boils down to the com­po­si­tion of the in­vestor base in our mar­ket as well as the in­her­ent liq­uid­i­ty of the mar­ket. So when we think about the in­vestors in the lo­cal eq­ui­ty space, it’s made up main­ly of in­sti­tu­tion­al in­vestors, which will be like our­selves mu­tu­al fund providers, pen­sion plans and in­sur­ance com­pa­nies.

“They tend to be re­spon­si­ble for most of the trad­ing that hap­pens on the stock ex­change. But be­cause these plans and these firms are so large, when we have a block of se­cu­ri­ties that we could buy, we tend to have a buy and hold ap­proach,” she al­so agreed.

Fur­ther, Ro­driguez-Greaves not­ed that when one looks at re­tail in­vestors, on­ly about three in 100 per­son in T&T in­vest di­rect­ly in the stock mar­ket through bro­ker­age ac­counts.

“...Those who have ac­cess to US dol­lars would prob­a­bly pre­fer to have your monies in­vest­ed in a more liq­uid mar­ket like the US Stock Ex­change which is per­form­ing and which is pro­vid­ing bet­ter re­turns. So the un­der­per­for­mance re­al­ly isn’t cap­tur­ing the au­di­ence,” she added.

Ro­driguez-Greaves added there is al­so the fac­tor of a very risk-averse in­vest­ing pub­lic, mean­ing that peo­ple tend to fo­cus more on the fixed in­come funds and not nec­es­sar­i­ly putting cap­i­tal to risk in funds such as the Growth and In­come Fund.

On oth­er high­lights, Ro­driguez-Greaves not­ed that in 2022, the UTC’s US Dol­lar In­come Fund would have been paid just about one per cent, adding that at the end of 2024, it was up over three per cent.

“On the TT dol­lar In­come Fund we start­ed at 1.15 per cent and at the end of last year, we were up to 2.85 per cent. So de­spite the de­cline in short-term rates in the US and the re­po rate re­main­ing un­changed, we did see upticks in longer dat­ed se­cu­ri­ties so we were able to repo­si­tion the port­fo­lios to re­al­ly ben­e­fit from high­er in­come, which we passed on to unithold­ers,” she added.

In her re­port, Ro­driguez-Greaves al­so stat­ed that in 2024, the lo­cal stock mar­ket faced an­oth­er dif­fi­cult year, with all three ma­jor in­dices reg­is­ter­ing de­clines for the third con­sec­u­tive year.

She not­ed the Com­pos­ite In­dex, All T&T In­dex, and Cross-List­ed In­dex dropped by 11.6 per cent, 12.7 per cent, and 7.7 per cent, re­spec­tive­ly, wors­en­ing from the 2023 de­clines of 8.9 per cent, 9.8 per cent, and 5.6 per cent.

“Sec­tor-wise, de­spite all sec­tors post­ing neg­a­tive re­turns, trad­ing was the best per­former with a -0.5 per cent re­turn, fol­lowed by con­glom­er­ates at -2.3 per cent, and bank­ing at -10.5 per cent.

“The worst-per­form­ing sec­tors were en­er­gy, man­u­fac­tur­ing and non-bank­ing fi­nance with re­turns of -56.6 per cent, -31.8 per cent, and -20.7 per cent per cent re­spec­tive­ly,” Ro­driguez-Greaves stat­ed.

She fur­ther not­ed that some stocks saw sig­nif­i­cant gains, with En­deav­our Hold­ings Ltd (EHL) ris­ing by 37.4 per cent, fol­lowed by Pres­tige Hold­ings Ltd

(PHL) at 21.5 per cent, and CIBC Caribbean Bank Ltd (CIBC) at 15.1 per cent.

On the con­trary, the worst-per­form­ing stocks in­clud­ed LJ Williams Ltd (LJWB) which de­clined by -66.5 per cent, fol­lowed by T&T NGL Ltd (NGL) and Guardian Me­dia Ltd (GML) with re­turns of -56.6 per cent, and -45.5 per cent re­spec­tive­ly.

Look­ing ahead

As the UTC looks to fis­cal 2025, Ed­wards said its fo­cus re­mains on deep­en­ing its im­pact and ex­pand­ing its reach while main­tain­ing fi­nan­cial strength and op­er­a­tional ex­cel­lence.

He added re­gion­al ex­pan­sion ef­forts are ex­pect­ed to be in­ten­si­fied as the UTC con­sol­i­dates the gains re­alised in Ja­maica, St Lu­cia, St Vin­cent, and Grena­da, while strate­gi­cal­ly ex­pand­ing in­to ad­di­tion­al East­ern Caribbean Cur­ren­cy Union ter­ri­to­ries.