GBP90m invested in VFM La Valette
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 Governments 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
He explained how this was further compounded by the tragic events of
11 September which heaped uncertainty and fear onto an already difficult
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
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.