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Scotia Investments targets NDX billions with new fund

Published:Friday | February 19, 2016 | 12:00 AMSteven Jackson
Lissant Mitchell, CEO of Scotia Investments Jamaica Limited.

Scotia Investments Jamaica Limited (SIJL) wants to attract some of the billions paid out this month to NDX bondholders into its newly launched Scotia Premium US dollar index fund.

SIJL said the fund will defend investors against depreciation of the local currency.

"The timing of the fund is important with about $50 billion coming into the market a week or so ago from the NDX payout from 2013. So obviously, there is quite a bit of liquidity in the market and we thought it was important, from a timing perspective, to afford our clients the opportunity to take advantage of a product of this nature," said SIJL Chief Executive Officer Lissant Mitchell at the launch of the fund in Kingston on Wednesday.

The company requires a minimum investment of $150,000, but it becomes less with a 'pre-authorised contribution'.

The company soft-launched the fund in previous months but declined to reveal the take, up or projections for the fund.

"Without saying too much about what our projections are, we feel that this product in the short to medium term will do reasonably well in terms of an asset-under-management perspective," said Mitchell.

The fund invests primarily in US dollar-denominated fixed-income securities. The main competitors of this fund are Sigma Liberty, offered by Sagicor Investments, and the IB Fund offered by NCB Capital Markets. Scotia offers a quarterly distribution option on the income earned in the fund. It states that the main competitors do not offer this option.

The new product forms part of SIJL's strategy to increase its fee-based services and reduce its reliance on net interest revenue. SIJL made net profit of $1.02 billion for its October year end 2015 or 45 per cent less profit than a year earlier.