The US$ Fortress World Funds made impressive gains of up to 8.7% during the third quarter of 2024 and up to 24.2% over the past year.

Leading fund manager, Fortress Fund Managers (FFM), shared these results with investors recently in its September 2024 Quarterly Report for the Fortress World Growth Fund and the Fortress World Fixed Income Fund. Both funds provide access to global equity and fixed income investments for investors in Barbados with U.S. dollar accounts.

Fortress World Growth Fund gains 24.2% over past year

During the quarter the Fortress World Growth Fund gained 8.7% and was up 24.2% over the past year.

The net asset value (NAV) or price per share at September 27 was US $1.2505. Net assets of the World Growth Fund were US $10.6 million, up from $7.6 million at the same time last year. Its annual compound rate of return since inception in January 2021 is 6.3% per year.

Fortress reported that global equities had a strong quarter as the U.S. Federal Reserve (Fed) began cutting interest rates. “The Fed lowered its target rate 0.5% in September and investors positioned themselves for more cuts to come. Lower rates plus higher conviction of a soft-landing scenario supported broad gains in U.S. equities, with strength especially among value sectors like utilities, real estate and financials.”

The S&P 500 index of large U.S. stocks returned 5% while value stocks as an index gained 9% and growth returned 3%.

Internationally, Japanese equities fell sharply in July after a surprise rate hike by the Bank of Japan but recovered to post slight gains as the quarter closed. In much of Europe, economic slowdowns supported hopes for further rate cuts, causing stocks in the region to advance modestly. “Overall, moderate gains and currency strength against the U.S. dollar helped international equities outperform the U.S.”

In emerging markets, Chinese equities rose just over 20% in September from very depressed levels after the government announced a series of economic stimulus measures. Other emerging market equities gained as well on hopes for improved growth in China.

The World Growth Fund’s portfolio is invested in high-quality, well-valued shares in U.S., international and emerging markets.

World Fixed Income Fund gains 9.3% over past year

The Fortress World Fixed Income Fund gained 4.3% in the third quarter and was up 9.3% over the past year. Its NAV at September 27 was US $0.9646 and net assets were US $5.7 million, up from $5.2 million for the same time last year. The Fund’s annual compound rate of return since inception in January 2021 is -1.0% per year.

During the quarter the U.S. 2-year treasury yield dropped from 4.77% to 3.55%, while the 10-year yield fell from 4.29% to 3.75%. “As yields fell, bond prices rose, and this increase in price, combined with coupon income previously locked in at high rates, led to healthy returns across the Fund’s holdings,” the report noted.

It went on to state that the U.S. yield curve steepened as short-term yields fell more than long-term yields, and credit spreads stayed narrow. “Typically, in rate cutting cycles, credit spreads widen to reflect the increased risk of holding corporate bonds in the event of a recession. However, the U.S. has not yet entered a recession, despite a weaker job market. Still, aggressive cuts have been priced into the yield curve and the futures market now expects another two to three 0.25% rate cuts this year.”

Fortress suggested that while such rate cuts could indicate a “soft-landing scenario”, the bond market could be wrong on predicting the path of cuts. “We continued to maintain shorter maturities on corporate bonds and longer maturities on treasuries, while keeping the credit quality of corporate issuers very high. The average term to maturity of the Fund’s portfolio is slightly longer again this quarter at 8.1 years and the average gross yield is 4.6%, a good estimate of its medium-term return potential.”

The World Fixed Income Fund 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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Fortress Fund Managers

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