Nigel Edwards

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In the face of a challenging financial environment caused by COVID-19, executive director of the Unit Trust Corporation Nigel Edwards is expressing hope for the future.

But Edwards said he and his team are not just sitting around and wishing for a brighter future, they are actively working to try and make things better.

The 2019 financial year was a fantastic one for the UTC, Edwards said.

“To underline our 2019 performance, the corporation’s total income grew impressively by $1 billion from $0.3 billion in 2018 to $1.3 billion. These are solid results even in the face of market volatility and challenges, and are a direct result of our commitment to all our investors,” Edwards said.

COVID-19 has however made it hard for Edwards and his team to properly celebrate their increased fortune last financial year.

The UTC has now made a total comprehensive loss for the first quarter of 2020 of $45 million.

The main driver of this loss was the swing in the Net Change in Fair Value of Investment Securities from $639 million at the end of last year to an accounting loss of $508 million for the three months ended 1 March, 2020.

Edwards said with the change in accounting to IFRS 9 in 2018 the UTC tried to prepare its unitholders for “more volatile results.”

But not even they could properly prepare for the unprecedented times caused by COVID-19.

However, he said the UTC tried to help manage the market fallout that was taking place globally for the benefit of unitholders

“We were very deliberate about managing our exposure to those markets so in about mid-march when markets were really starting to be hit especially in the US, in particular, we made a very deliberate decision to sell all of our US equity holdings at that point in time so that we did not sort of ride the rest of the market down for the rest of Q1 for 2020,” he said.

“We’ve been very deliberate about what the strategy for reinvesting is, how we reinvest, where we reinvest, what type of opportunities do we look for and those were all predefined before we took the decision to exit,” Edwards said.

Edwards said the UTC is starting to see the benefits of their decision-making so far.

“Sitting from where I sit now I can say that we are starting to see some of the benefits of the decisions that we took and we are very hopeful that we will continue to see that through the rest of 2020,” Edwards said.

“Because those decisions to come out of US equities and go to cash and now to sort of very wisely redeploy investments into the non TT securities is starting to bear some fruit,” he said.

Edwards said UTC’s track record goes beyond performance and is one of “safety and focusing on the security of its unitholders”.

“Have faith in the Unit Trust, have faith because you know our track record, have faith because we have a system of governance, a system of oversight that ensures that we are actively managing to secure your investment and we are actively managing to ensure that you actually have cash in your pocket,” Edwards said.

“Which is why we balance the capital reservation objective with the objective of bolstering the distribution and so we are trying to manage the balance of those two objectives,” he said.

For the first quarter of 2020, the UTC’s distributions to unitholders was $53 million.

Total distribution to unitholders was increased to $265 million last year.

“UTC has faced challenges before, but the decisions made will always be in the best interest of our unitholders,” he said.