Profit hike due to the unrealised appreciation in the value of investments

Sagicor Manufacturing & Distribution Select Fund recorded a net profit of J$457.6 million for the second quarter, which runs from April to June 2021.

This is an increase of 90.8 per cent relative to the corresponding quarter of 2020. The outturn for the second quarter of 2021 was primarily due to unrealised appreciation in the value of investments.

This reflected increases in some prices of listed manufacturing and distribution companies relative to the end of March 2021. The Jamaica Stock Exchange (JSE) Manufacturing & Distribution index rose by 13.4 per cent during the June 2021 quarter, with 25 of the 32 securities in the index recording price increases.

The fund earned $17.9 million from dividend income for the quarter, an increase compared to dividend income of $12.5 million received in the corresponding quarter of 2020. Overall, the impact of COVID-19 on profits has impacted dividend payout, as some companies reduced pay out.

Some companies reserving dividend payment

At the same time, some companies are still reserving dividend payments to buffer their cash holdings in the event of possible fall-out in the future. However, the improvement in dividend income during the second quarter in part reflects that companies within the sector that provide household items may not have been adversely impacted by the global pandemic.

For the June 2021 quarter, total expenses amounted to $6.9 million. The cost was comprised mainly of management fees and legal & professional fee costs. Continuing with rebalancing activities that started in the first quarter, the Fund acquired additional shares in Lasco Distributors in April 2021.

The rebalancing exercise is to improve the portfolio weighting closer to the index weighting thus enabling better tracking of the JSE Manufacturing & Distribution index. At the end of June 2021, the total assets were valued at $4.23 billion.

This comprised of financial assets held by the Fund of $4.15 billion (97.9 per cent). The value of assets grew relative to end of June 2020 and March 2021, reflecting the price increases for most securities in the fund.

The assets were financed by equity of $4.18 billion and liabilities of $53.3 million. Liabilities largely account for $40.17 million to be paid to shareholders in July 2021.

Investment objective

The Fund invests in a representative sample of securities included in the respective Indices that collectively has an investment profile similar to the Indices. Due to the use of representative sampling, the Funds may or may not hold all the securities that are included in the respective Indices.

More specifically, the Manufacturing & Distribution Select Fund seeks to track the investment results of an index composed of Jamaican equities in the manufacturing & distribution sector. The fund and the index are comprised of publicly traded manufacturing & distribution stocks that are listed on the JSE.