UTC Investments

[neilsingh100]

Do you all feel safe investing with the UTC since it is not backed by deposit insurance and regulated by the central bank?

How come they paying twice the interest rates on their mutual funds compared to the bank?

[doc123]

double post...sorry.

[neilsingh100]

UTC investments should be safe but with all going on now need to diversify away from CL/Clico exposure.

[mazdatt]

In the following article in the express UTC CEO saying they have no exposure to Clico but have investments in CL Financial. Isn't the latter worst since the PM said CL is bankrupt?

These reassurances from the UTC starting to sound like the Central Bank Governor with Clico.

I have a funny feeling something not too right there when you have to keep reassuring people plus the mentions in budget about them.

'UTC can withstand public glare'
http://www.trinidadexpress.com/news/_UT ... 19564.html

"I wish to underscore here this evening that the Corporation's mutual funds or unit schemes have no investment in CLICO," Carrington said.

"However, the funds do have investments with two members of the CL Financial Group, the parent company of CLICO—Republic Bank and CL Financial," she said.

[pugboy]

this might cause interesting reactions
just like when Abu said "There will be no looting"

[geodude]

boi under my matress looking real cosy right now, what about republic is there anything to be worried about

[silver]

How come they paying twice the interest rates on their mutual funds compared to the bank?

They paying twice interest rates of savings/chequing accounts....bank's mutual funds are paying similar rates

In the following article in the express UTC CEO saying they have no exposure to Clico but have investments in CL Financial. Isn't the latter worst since the PM said CL is bankrupt?

No it isn't worse since the issue is with the EFPA issued by clico where ppl are not able to recover their monies (in full) The issue of insolvency is probably because they have promised their assets out to lenders and investors so they don't have any way to cover additional exposures...the ppl that hold those assets are fine...
Also the investment in CLFL is RBL shares and the rum company that angoustra bought that makes Appleton. In any case these investments only represent 1-2% of the total funds under management... UTC has over 19Billion in funds under management...do the math.

[mazdatt]

They paying twice interest rates of savings/chequing accounts....bank's mutual funds are paying similar rates

RBL paying 1.2% on their mutual fund and UTC paying 2.1%

I need to remind you Clico policies including the EFPA was backed a statutory fund and regulated by the Central Bank and we all know everyone was told their fund as safe by the central bank to find out now this is not so.

UTC is a trust so you own what they invest in good or bad. They are self regulated (i.e. not regulated by central bank or SEC).

So why ppl taking out their money out of UTC and they have to keep reassuring everyone your money safe. Sounds a little fishy to me.

[neilsingh100]

UTC holding a portion of a US$320 million CL Financial Bond from what I understand is worthless.

They also loaned CL money to buy Lascelles De Mercado for twice what it worth now with the shares in Lascelles as collateral so they could only recover back half the money they loaned.

It seems to me they are being less than honest with the public and trying to reassure people to avoid a run.

Once the big investors start taking out their money we are screwed and the ppl the government shafting is these same ppl so unless you could take reassurances to bank I staying away from UTC.

[racy lady]

In the following article in the express UTC CEO saying they have no exposure to Clico but have investments in CL Financial. Isn't the latter worst since the PM said CL is bankrupt?

These reassurances from the UTC starting to sound like the Central Bank Governor with Clico.

I have a funny feeling something not too right there when you have to keep reassuring people plus the mentions in budget about them.

'UTC can withstand public glare'
http://www.trinidadexpress.com/news/_UT ... 19564.html

"I wish to underscore here this evening that the Corporation's mutual funds or unit schemes have no investment in CLICO," Carrington said.

"However, the funds do have investments with two members of the CL Financial Group, the parent company of CLICO—Republic Bank and CL Financial," she said.

I couldn't believe this when I heard it on the news...do these people really think before they talk?

[silver]

RBL paying 1.2% on their mutual fund and UTC paying 2.1%

i had to check that for myself...ur correct...but that to me only speaks to the strength of the UTC rather than a weakness...the TT$ UTC fund has over 10Bn in Assets under mgnt...i'm sure its much less in RBL..plus the debt mkt is dead...T-bills are at ridiculous rates. So i'm sure alot of deposits are held in cash due to lack of investment opportunity.

UTC is a trust so you own what they invest in good or bad. They are self regulated (i.e. not regulated by central bank or SEC).

They are audited by the central bank and each of the funds are registered with the SEC, which means they report to them based on their guidelines (just as does every other bank mutual funds)

So why ppl taking out their money out of UTC and they have to keep reassuring everyone your money safe. Sounds a little fishy to me.

Ppl are panicked...they don't even know why they are taking out their money...its a loss of confidence in the financial landscape of T&T because of this Clico issue...remember the 'run' on republic bank..when the clico news first broke?

UTC holding a portion of a US$320 million CL Financial Bond from what I understand is worthless..They also loaned CL money to buy Lascelles De Mercado for twice what it worth now with the shares in Lascelles as collateral so they could only recover back half the money they loaned

I think its the same transaction from what i read in the express...its a participation in a TT$377Mill bond to buy 86% of Lascelles which was secured by the very shares they purchased.
When u use shares as collateral...the hypothecation and magin usually takes into consideration possible fall in share price. If they don't have enough shares to cover the exposure...more are requested...UTC sais the exposure is fully secured..which has to be based on mark to market on the share price...


Ofcourse they are trying to assure the public...(who wants a run?) but more importantly inform the public....there is alot of misinformation and 'hunches' and heresay causing financial instability in the market...
customers jus need to educate/inform themselves..read a lil more and rely less on gossip...

[doc123]

They are audited by the central bank and each of the funds are registered with the SEC, which means they report to them based on their guidelines (just as does every other bank mutual funds)

Wasn't Clico "regulated" also? and look what the government did.....at this moment there is no security for investors in TT and no incentive to put your money in the TT financial system. This is the damage Dookeran has done.

The safest thing for people to do is pull their money out of UTC....or else if it crashes, Goverment is not going to honour any guarantees or contractual agreements as seen with Clico.

[Country_Bookie]

I need to remind you Clico policies including the EFPA was backed a statutory fund and regulated by the Central Bank and we all know everyone was told their fund as safe by the central bank to find out now this is not so.

.

Courtesy Mr. Ian Narine, in last week's Business Guardian:

What is the EFPA?

There is a burning question that lies at the heart of the Clico EFPA issue. Is it an annuity as the name Enhanced Flexible Premium Annuity suggests, or is it a glorified term deposit? The implications are far reaching. If it is an annuity, then there must be an annuitant who is the policyholder. To the best of my knowledge, an annuity is designed as an investment vehicle for individuals. If that is correct, then how on earth did credit unions, trade unions, incorporated entities and government agencies end up in the Clico EFPA as reported. Who is the policyholder in these instances? Do the people who sold these products to entities other than individuals have any questions to answer?

If the product is deemed to be an annuity and you have a case where entities who were not ordinarily eligible for this investment sought a loophole to do so, should such entities be eligible for any type of bailout at all? Further was the selling agent, along with the policyholder and the entity providing the funds (to the extent that they differ) acting in collusion where such actions can be challenged?
There is a point of view that the funds invested in the EFPA were guaranteed by the statutory reserve. If that were so, then this reserve can only seek to protect the principal of the investment.
The interest return was wholly and exclusively a Clico guarantee, so if Clico failed, there is really no justification to step forward and claim interest on the principal as part of any bailout. Any representation that the interest was externally guaranteed can be argued to be a wilful attempt to deceive the investor.

To the best of my knowledge, the statutory reserve holds $1 of an asset for every $1 of liability that is placed with an insurance company. If, for example, one Republic Bank Ltd (RBL) share at $30 was placed into the reserve, Clico as the holder of the RBL share could have accepted an EFPA liability of $30. If RBL’s share price rose to $90, then Clico could have accepted a further $60 against this one share. However, if RBL’s share price fell to $60 from $90, then another asset worth $30 would have had to be found to place in the reserve fund in order to remain compliant, since the EFPA liability was sold as a guarantee independent of market conditions. If Clico was increasing its liabilities by accepting funds through the EFPA and asset prices fell, then it was quite possible to have a shortfall in assets in the statutory reserve. Did every Clico agent who sold the EFPA either know or should have known how the statutory reserve works? Did they have a duty to indicate to the investor the possibility that there can be a shortfall of assets in the fund if asset prices were to decline?

http://guardian.co.tt/bgmagazine/business/2010/09/30/business-magazine-september-30th-2010

[Halfbreed07]

"utc backs ya investment 100%, meaning 100% of ya investment can cashed in at anytime, no other institution can do this."
UTC branch manager told me this

[doc123]

^ How? by backing it up with the statutory fund also?

[Halfbreed07]

^ How? by backing it up with the statutory fund also?

Magic unicorns is my guess.

all she said was everybody could withdraw all the money and they will be able to get it

[doc123]

LOL...more like ah magic Duck from the Duck&Run farm.

Ole nanny goat Kamla, Watson the Fox and "the stink gander egg layer Dookeran" with the rabid Pothong Ramlogan to defend them.

PP change to AF (Animal Farm)

[Country_Bookie]

"utc backs ya investment 100%, meaning 100% of ya investment can cashed in at anytime, no other institution can do this."
UTC branch manager told me this

That branch manager is a complete moron. Ask him what if everybody who invest in UTC come to withdraw the $10Bn in funds they have under management on the same day if they’ll still be able to “back the investment 100%” and pay out $10Bn in one day.

Doc123,
The Stat fund is for registered insurance products sold by registered insurance companies. Mutual funds are not covered by any form of insurance. Mutual funds are incorporated as a trust, where the trust owns the underlying assets the fund invests in (i.e. stocks, bonds etc). So in the case of failure of the financial institution which markets the fund, the assets of the mutual fund are separate from the financial institution.

[Halfbreed07]

"utc backs ya investment 100%, meaning 100% of ya investment can cashed in at anytime, no other institution can do this."
UTC branch manager told me this

That branch manager is a complete moron. Ask him what if everybody who invest in UTC come to withdraw the $10Bn in funds they have under management on the same day if they’ll still be able to “back the investment 100%” and pay out $10Bn in one day.

Doc123,
The Stat fund is for registered insurance products sold by registered insurance companies. Mutual funds are not covered by any form of insurance. Mutual funds are incorporated as a trust, where the trust owns the underlying assets the fund invests in (i.e. stocks, bonds etc). So in the case of failure of the financial institution which markets the fund, the assets of the mutual fund are separate from the financial institution.

very unlikely event, but i am sure if everyone did withdraw on the same day, utc would not be able to handle the volume of people anyway, hence rendering it a possible but improbable occurrence.

[allblacks]

'UTC funds safe'

By 'be aware': Eutrice Carrington
Story Created: Oct 4, 2010 at 9:40 PM ECT
Story Updated: Oct 4, 2010 at 10:02 PM ECT

Text of the speech delivered yesterday by acting chief executive officer of the Unit Trust Corporation (UTC) Eutrice Carrington at the opening of the One Woodbrook Place Customer Service Centre.

It is my pleasure to welcome you all to this, the formal opening of the UTC's newest Customer Service Centre (CSC). It is anticipated that this venue will be the hub of our customer service network for the Western peninsula.

Faced with a lease that was due to expire by 2011 with no prospect for renewal and the subsequent option of this location, we opted to make this move sooner rather than later. We are, however, mindful of the reality that some of our loyal unit-holders may still desire a CSC resident in the Westmoorings area. I hasten to reassure you that we are actively researching alternative sites in Westmall for the establishment of a relevant physical customer touchpoint (Customer Service Centre or Agency).

This very impressive urban development project, One Woodbrook Place, represents one of the first major upscale residential/commercial additions to the city of Port of Spain since the middle of the last century. As one of the first commercial tenants to open its doors to customers in this complex, it would be remiss of us to not recognise the role of Home Construction Ltd in the development of this venture. The UTC, therefore, takes this opportunity to congratulate both the Port of Spain City Corporation and the owners of this facility for their vision in conceiving and executing this development.

My main role here, this evening, is to welcome you. However, I want to take the opportunity to address some of the anxieties currently prevailing among some sections of the public and consequently among some of our unit-holders. Before dealing with that specific matter, I need to reflect on a couple key principles that have guided our investment decision-making process from the outset.

First, the UTC sees preservation of value alongside competitive returns for investors as its top priority. Second, the UTC is focused on delivering consistent returns to investors on a long-term basis, as opposed to volatile (even if attractive) returns on a short-term basis, ie, one or two years.

We continued to hold fast to these principles which are interwoven into the products and plans that we offer to the investing public. We understand that our investors run across many strands of society: public servants, members of the protective services, taxi-drivers, farmers, teachers, doctors, members of the legal profession, small business owners, captains of industry, credit unions, pension funds and retirees. We understand the investment objectives and constraints of these various groups and apply the principles of risk tolerance, time horizon and diversification in setting our investment strategies.

The Corporation's formula is simple: we build the UTC service and funds around five main operating principles, namely: safety of principal, return on investment, ease of access to funds, diversification, information and disclosure. Apart from mutual funds, the UTC is also statutorily empowered to pursue the following lines of businesses: Trust Company, Merchant Bank, Card Services, Bureau de Change.

All these businesses are owned by the Corporation and are managed separate and apart from its mutual fund business. I will focus the remainder of my address on the funds of the Corporation and the Merchant Bank. At our last AGM, held on May 26 this year, I said, "I know that there are some concerns about the Corporation's exposure to the CL Financial Group. I would like to take this opportunity to shed some light on the matter." Today, I will update you on the current status of this situation.

I wish to underscore here, this evening, that the Corporation's mutual funds or unit schemes have no investment in CLICO. Since their establishment, the funds have never invested in any security or product issued by CLICO.

However, the funds do have investments with two members of the CL Financial Group, the parent company of CLICO:
i. Republic Bank;
ii. CL Financial.

Republic Bank, as you know, is one of the leading indigenous banks in the domestic financial system and has thrived despite the vagaries of the Trinidad and Tobago economy. The Funds have a combined investment exposure of TT$515 million, comprising bonds and shares in this company, which represents approximately three per cent of TT$18.9 billion in funds under our management. Indeed, the First Unit Scheme's holdings in Republic Bank shares is now worth TT$224 million, an increase in value to our unit-holders of approximately TT$211 million from its initial investment of TT$13.9 million in the company.

The Funds' remaining exposure to CL Financial Group is limited to its TT$377 million participation in a commercial paper facility issued by CL Financial to acquire an 86 per cent equity stake investment in Lascelles de Mercado, a leading Jamaican conglomerate that, among other activities, manufactures, markets and distributes the internationally acclaimed Appleton rum. The facility is secured by all of the Lascelles shares acquired by CL Financial.
I now turn to the Merchant Bank's exposure to CL Financial. As at October 1, 2010, the Merchant Bank exposure stands at TT$1.2 billion. I would like to stress that all the CL Financial facilities held by the Merchant Bank are fully secured by both real and financial assets.

Real assets securing the Merchant Bank's holdings with the Group include first mortgages on hotels, malls, plant and equipment and lands within the Group. Financial assets including shares, cash deposits placed in our own mutual funds and the assignment of receivables also form part of the collateral packages backing some of the Merchant Bank's holdings.
In the meanwhile, I wish to assure unit-holders and the investing public that the Corporation's investment philosophy is well founded. Adherence to the principle of spreading risk ensures that the funds under management are well diversified across asset classes, economic sectors and geography.

Our enabling legislation prohibits us from investing more than ten per cent of the combined resources of all the Funds in any one entity. This essentially enshrines diversification into the investment policy of the UTC. This is aptly illustrated by the following. Of the $2.3 billion holdings in stocks, $223 million or 1.19 per cent of the total funds under management is held in Republic Bank shares. Of the $6.5 billion in bonds, $292 million or 1.53 per cent is held in Republic Bank bonds and $337 million or 1.78 per cent in a CL Financial bond secured by shares of Lascelles. The Government of Trinidad and Tobago and GOTT-guaranteed bonds account for $1.18 billion or 6.24 per cent and $1.5 billion or 7.94 per cent, respectively, of total funds under management.

The $2.3 billion invested in stocks and shares are spread across companies in Trinidad and Tobago and throughout the US, Canada, Asia the Pacific Rim countries, Latin America and Europe, evidencing that the $18.9 billion dollars in Mutual Funds are well diversified. Above all, the Corporation's mutual funds hold TT$10 billion in cash and money market instruments at the Central Bank of Trinidad and Tobago and all the major bank and non-bank institutions in Trinidad and Tobago.

In addition to investment considerations, UTC's enabling legislation also entrenched a particular governance structure which remains in place to date. The enabling legislation provides for the Minister of Finance to appoint a representative to the Board. Other members of the Board represent institutions that provided initial capital to the UTC at its inception and include representatives from the Central Bank, NIB, commercial banks and insurance companies. Three independent directors round off this 12-member board.

Additionally, the UTC maintains a high level of disclosure, as informed by its enabling legislation. Its accounts are audited by the Auditor-General on an annual basis for all its activities. These accounts are laid in Parliament, in accordance with the strictures of the Act.

If this global financial crisis has taught us one thing, it is to be alert and questioning investors. Image, size and power can disintegrate overnight. What endures is timely and transparent financial reporting. It's that simple. Be informed and take advantage of the financial reporting opportunities that exist to learn and understand more.

Before you invest: ask to see the annual report, demand to know who the directors are, question discrepancies. Shine the light and when you do, you will see the institutions that can stand the glare.

The UTC's mutual funds are safe and are able to withstand the glare of public scrutiny. We are quite clear on our fiduciary responsibilities toward unit-holders. Over our 28-year history, we at the UTC have pursued an investment philosophy that has avoided concentrations in individual assets while promoting diversification. We believe that such a philosophy will continue to stand the test of time to the mutual benefit of UTC and investors alike.
Express 5.10.10

People have a read so at least you will be able to have something tangible to base your comments on.

[neilsingh100]

There is not such thing as a guarantee and once people loose confidence it is takes a long time to get it it back. I think the way government handle this Clico thing will set the financial sector in this country back 20 yrs and in the end everybody will loose.

[Halfbreed07]

*remembers South Park rerun last night*

[pugboy]

well at least UTC supposed to be deposit only organization,
they not in the business of lending to fund other businesses
which is where the bachannal usually starts

[ek4ever]

And don't put too much faith in the SEC making sure things run correctly.....they are now involved with getting money returned to investors from a particular investment company where there was a clear breach of regulations, yet this investment company is still being allowed to take deposits.....go figure

[pugboy]

SEC is a waste of time, they have allowed jak to do what he wanted with gl shares