6 MARCH 2002

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GBP90m invested in VFM La Valette Funds

- shareholders briefed on international investment climate

At the La Valette Funds SICAV Annual General Meeting, Rothschild Asset Management Director Marcus Brookes addressed shareholders on the present situation of foreign markets with appropriate reference to the 11 September terrorist attacks on the United States.
The Directors also presented to the shareholders present the Annual Report and Financial Statements of the Company for the year ended September 2001. The report provided information on the net asset values of the investment funds in the company, which amounted to GBP90 million. Resolutions presented by the Board were unanimously approved by shareholders.
Speaking about the international bond markets, Mr Brookes explained that they had experienced two distinct rallies, interrupted by a set back last April and May when equities rallied sharply as the US Federal Reserve cut the Fed Funds rate aggressively to try to boost the economy.
Equities that had sold off in the wake of the first round of earnings downgrades became oversold and investors bought back. Bond yields fell again in September as the outlook for the global economy deteriorated and inflation scares dissipated further.
Mr Brookes concluded that, "Notwithstanding these developments, we believe that the aggressive monetary and fiscal easing which the governments of major economies are implementing will bring about an economic recovery into 2002 and that equities will outperform both bonds and cash in that period as that cyclical recovery takes hold."
Speaking about the performance of the domestic market, Aldo Scardino from Rizzo, Farrugia & Co. (Stockbrokers) Limited - sub-advisors to the La Valette Malta Fund and La Valette Malta Bond Fund – explained, "The likely start of the Government’s Privatisation Programme, the gradual pegging of the Maltese Lira with the Euro, the convergence of interest rates to those prevailing in the Euro zone over the next two years and dividend yields already above short-term interest rates, allows scope for quality equity prices to rise."
Mr Scardino added, "The government is expected to substantially reduce its borrowing requirements, thus limiting the availability of new government paper. Against this background, the Maltese capital market should perform positively and this should be reflected in the La Valette Malta Fund and the La Valette Malta Bond Fund."
Kenneth Farrugia, Assistant General Manager of Valletta Fund Management Limited, gave a presentation on the funds falling under the umbrella of the La Valette Funds SICAV. Mr Farrugia provided the shareholders present with an overview of the main events which characterised the difficult market conditions for both the domestic and the international equity markets.
He explained how this was further compounded by the tragic events of 11 September which heaped uncertainty and fear onto an already difficult economic situation.
In referring to the bond funds managed by the company, Mr Farrugia explained, "When the domestic and international equity markets are experiencing volatility, the demand for bond instruments, which traditionally provide less volatility than equity investments, increases significantly. This has impacted positively on the performance of the bond funds, which also benefited from the aggressive rate cut policies adopted by the major Central Banks.”
Mr Farrugia also addressed the concerns faced by many investors, given that market volatility provides an immediate challenge to investor sentiment.
In his closing address, Mr Farrugia provided the shareholders present with information on the asset allocation and performance of the newly launched La Valette Mediterranean Rim Fund denominated in United States Dollar.
He explained how the new fund was structured to provide investors with a balanced portfolio of bonds and equities in the emerging markets of the Mediterranean region.



The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt