Tuesday 26 May, 2020

UTC managing COVID-19 risk, unitholders assured

The COVID-19 pandemic has posed challenges to financial markets globally, and Trinidad and Tobago is by no means immune to these effects.

As the pandemic continues to present new financial challenges, the Unit Trust Corporation (UTC) is taking steps to ensure its unitholders are protected.

Speaking with Loop News at his Independence Square, Port-of-Spain office, UTC Executive Director Nigel Edwards discussed the Corporation’s performance for the full year 2019 and the first quarter of 2020.

Describing the Corporation’s 2019 performance as “truly fantastic” Edwards noted an after-tax profit $99.3 million for that year.

But, he said, with sharp market declines experienced in the months of February and March due to COVID-19, UTC recorded a comprehensive loss of $45 million for the three months ended March 31, 2020.

Edwards said this decline could be attributed to the swing in Net Change in Fair Value of Investment Securities which moved from a favourable result of $304 million in 2019 to $508 million for Q1 2020.

In spite of these challenges, Edwards expressed confidence in UTC’s ability to successfully navigate the future.

To manage the fallout of the financial shocks, a decision was taken mid-March to exit or sell non-local equities, and return under specific, clearly laid out conditions.

“We decided what the strategy would be and we are managing that strategy very tightly now and we are gradually finding investment opportunities that fit our investment outlook.”

He said the Group is already seeing the benefits of this strategy.

“The message that we are communicating to our unitholders is the markets have fallen throughout Q1 and to some extent, even in Q2. We’re on top of it, we’re managing it… actively and aggressively.

We understand the importance of the safety of our unitholders and their investment. We understand how seriously they take the security of their investment and that’s why we manage it so aggressively to ensure that we protect that.”

Edwards said UTC prepared its unitholders for more volatile results by communicating changes in accounting to IFRS 9 in 2018.

To ensure the protection of unitholders, he said focus will continue on enhanced distribution, and management of the Group’s net asset value.

Cash distributions to unitholders have increased from $43 million in 2019 to $54 million in 2020.

Edwards assured that unitholders should remain confident in the UTC’s track record.

“Unitholders should continue to be invested, should continue to repose the level of trust because we are on top of their investments and managing it very carefully and very cautiously.”

In terms of its operations, Edwards noted that the Corporation was able to seamlessly transition to a remote working environment just a day after the first COVID-19 case was recorded in T&T.

Six of UTC’s nine investment centres remain open with reduced hours of operation.

Edwards assured that they remain fully functional as teams continue to work from home.  

He said he’s already seen the benefits of this new normal, citing increases in productivity across all teams.

“The general feedback I’ve gotten is that people seem to be generally happier working from home notwithstanding longer hours.”

He said the Corporation’s HR team is working out a new work from home policy given the current circumstances.

Edwards believes that these measures will have cost-savings benefits which can then be passed on to unitholders.

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