$28M hit for Silver Thatch

Pension fund urges investor patience

A private sector pension fund that services 14,000 Cayman Islands residents reported a US $27.9 million operating loss in the 12 month period that ended on 30 June, 2009.

The Silver Thatch Pension Fund also saw a net decrease in its assets of more than US$5 million in the same period.

However, the fund reported a significant increase in earnings for its three major investment schemes from July through September, and predicted the recovery would continue albeit in an uneven fashion over the next year.

‘We’ve started our recovery from the recession…but we think we’re going to have a bumpy recovery,’ fund manager Greg Brooks of RBS Coutts Bank told a group of more than 30 pension plan members Thursday evening.

According to Silver Thatch pension fund financial statements, all three of its major portfolios lost on their investments between 1 July, 2008 and 30 June, 2009. Their conservative portfolio lost about two per cent, the balanced portfolio lost more than 10 per cent, and the growth portfolio lost about 18 per cent.

The Silver Thatch balanced and growth portfolios also lost on their investments the previous year. However, the conservative portfolio gained about three per cent between July 2007 and June 2008.

Those numbers may sound grim for fund investors, but Mr. Brooks said they have to be considered in the context of the Silver Thatch funds’ year-to-year performance.

‘For the members, you’re still getting positive returns over a five year period,’ he said.

In fact, Silver Thatch funds growth over a ten year period from 1998-2008 has been between 24.5 per cent and 53.3 per cent, with the conservative investment portfolio seeing the best returns. Those numbers include a sharp decline from the markets crash in the third quarter of 2008.

‘That’s much better than leaving your money in a bank account,’ fund trustee Charles Farrington told attendees of the Silver Thatch annual general meeting Thursday evening.

Silver Thatch fund managers said signs of recovery were already beginning to appear.

Between 1 July and 30 September, all three major investment portfolios recorded growth; the conservative fund grew by more than five per cent, the balanced fund by more than eight per cent, and the growth portfolio by nearly 13 per cent.

Silver Thatch pension fund founder John Anderson told participants that the global markets appeared to finally be coming out of the ‘deepest, longest recession since the second World War.’

However, Mr. Anderson cautioned that world-wide financial growth is going to continue to be slower than it had been prior to the recession, and is likely to be led by developing countries like China and India rather than the US or the UK.

He also noted that unemployment was generally a ‘lagging indicator’ of economic recovery and that, for the short term, it may feel like ‘things are getting worse’ in this region.

‘We really expect it to be a bumpy ride in 2010,’ he said.