p17n63qg7jmbh1r4fin71pds1p454.pdf

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CHaIrman’S reVIeW Unit Trust Corporation Annual Report 2012
The European Fund was the best performer
in 2012, with a net portfolio return of 14.17%
vs its benchmark return of 19.40%. The Asia
Pacific and Latin American Funds followed
with returns of 13.87% and 8.70% compared
to their benchmark returns of 18.82% and
6.32% respectively.
OutlOOk 2013
Global growth is projected to be slow, with
both the World Bank and IMF lowering their
2013 forecast. The World Bank cut its previous
2013 growth forecast for the world economy
from the 3% projected in June 2012 to
2.4% as austerity measures, high unemployment
and low business confidence weigh on
economies in developed nations. Similarly,
the IMF now projects the world economy to
grow by 3.50%, less than the 3.6% forecast in
October 2012, with the majority of the revision
being driven by advanced economies.
Downside risks to global growth has increased
following the failure by the US lawmakers to
agree on a plan to address the country’s $11.7
trillion debt outstanding that subsequently
led to spending cuts of $85 bn to become
effective 1 March 2013. A similar type of policy
paralysis can occur in May if no decision
is made regarding the country’s debt ceiling
which can serve to prompt a sovereign downgrade
– an event that occurred with the debt
ceiling fiasco in August 2011.
Europe and the Uk remain troubled areas, as
the region faces contracting economies, elections
in key nations such as Germany, political
gridlock in Italy, elevated debt and rising unemployment
levels. With the majority of the
Caribbean tourists coming from the European
nations, growth prospects tourism-dependent
economies will also be tempered.
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
-5.00%
-10.00%
-15.00%
-20.00%
-25.00%
-30.00%
-35.00%
-40.00%
0.70%
0.65%
0.60%
0.55%
0.50%
0.45%
0.40%
0.35%
0.30%
0.25%
0.20%
0.15%
0.10%
0.05%
0.00%
2012 2011 2010 2009 2008
2012 2011 2010 2009 2008
TT comp Index
AII TT Index
Cross Listed Index
Figure 3: T&T Stock Market Returns 2008-2012
3 Month T Bill
6 Month T Bill
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Figure 4: T&T Treasury Bill Rates 2012
T&T economy is on the cusp of a turnaround
with forecasted growth of 2.5% in 2013 from
1.2% in 2012. Once the initiatives taken to
revive the local energy sector bear fruit and
expenditure on the country’s infrastructure
resumes we can expect positive growth
going forward. Such projects are likely to increase
investment opportunities that would
redound to the benefit of unitholders.
Volatility is expected to be the overriding
theme for 2013 as the concern of the economic
strength of Europe, the US debt ceiling
decision and the moderation of Emerging
markets still prevails. Such volatility will
be a challenge for investors worldwide, however
we at the UTC will be ever so diligent in
managing your investment.