The US$ Fortress World Funds made impressive gains of up to 10.1% during the fourth quarter of 2023.
Leading fund manager, Fortress Fund Managers (FFM), shared this news with investors recently in its December quarterly report for the Fortress World Growth Fund and the Fortress World Fixed Income Fund. Both funds provide access to global equity and debt investments for investors with U.S. dollar accounts.
World Growth Fund gains 10.1%
The Fortress World Growth Fund gained 10.1% in the fourth quarter, and was up 13.0% over the past year as global equities finished with “meaningful gains for the quarter, despite having started on a less enthusiastic note.”
During the quarter, the US Federal Reserve (Fed) kept interest rates unchanged and shifted to a softer tone in December, which reinforced expectations of future rate cuts and provided further support for equities. “The more speculative segments of the market led the advance, with the largest U.S. technology stocks driving index returns as much of the rest of the U.S. market and international investments posted more modest gains. The Fund’s core global investments via the Fortress Global Funds posted gains of between 8% and 12% for the quarter, across U.S., international and emerging markets,” the report noted.
In addition, the U.S. economy avoided a long-feared recession in 2023 as growth remained solid while inflation eased. “With the Fed’s target rate now at 5.25-5.5% there is significant room for rate cuts, when the time comes. The question is, will the cutting occur in a weakening economy with falling corporate profits? Some of the largest, most expensive stocks in the market are trading today at valuations so high that disappointment of any kind could be exceptionally painful. We continue to see far better risk/reward prospects where expectations, and prices, are much more down to earth and return prospects for the Fund’s investments remain substantial.”
The Fund’s net asset value (NAV) or price per share at December 29 was US $1.1087 while net assets were US $8.9 million, up from $7.0 million for the same period last year. Its annual compound rate of return since inception in January 2021 was 3.6% per year.
The Fund’s portfolio remained invested in high-quality, well-valued shares in U.S., international and emerging markets.
World Fixed Income Fund gains 5.5% in the fourth quarter
The Fortress World Fixed Income Fund gained 5.5% in the fourth quarter and was up 4.9% over the past year. Bonds had an exceptional period as yields fell to reflect lower inflation and interest rate expectations.
During the quarter, the U.S. treasury 5-year note yield fell from 4.61% to 3.85%, while the 10-year yield moved from 4.57% to 3.88%. “Lower yields pushed bond prices higher, erasing year-to-date losses, and leaving the main U.S. bond index with a 5.5% return for the year. Investment grade corporates outperformed both high yield and treasuries as credit spreads tightened even with an active new issue calendar. Emerging market bonds also gained in the quarter. Some of the Fund’s corporate floating rate note positions matured during the quarter, and the proceeds will be redeployed into similar investments as opportunities arise,” the report said.
The Fund’s NAV per share at December 29 was US $0.9305 with net assets of US $5.5 million, up from $5.1 million for the same time last year. The Fund’s annual compound rate of return since inception in January 2021 was -2.4% per year.
The average term to maturity of the Fund’s portfolio is 6.6 years and the average gross yield is 4.8%, a good estimate of its medium-term return potential. The portfolio is invested in a diversified portfolio of primarily high-quality US$ bonds.
The Fortress World Growth Fund and the Fortress World Fixed Income Fund are open to all new subscriptions in U.S. dollars.
Fortress manages over Bds $800 million (US $400 million) in assets across 12 funds with investments in regional, US, international and emerging markets.
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