T&T’s Her­itage and Sta­bil­i­sa­tion Fund (HSF) re­port­ed to­tal net as­set val­ue of US$6.08 bil­lion for the quar­ter end­ed Sep­tem­ber 30, 2024, which is a 12.9 per cent in­crease on the US$5.39 bil­lion val­ue the coun­try’s rainy-day fund re­port­ed as at Sep­tem­ber 30, 2023.

Com­pared to the quar­ter end­ed June 30, 2024, the to­tal net as­set val­ue of the HSF was 5.65 per cent high­er, re­port­ing an in­crease of US$326 mil­lion.

The quar­ter­ly re­port of the HSF stat­ed, “For the quar­ter end­ed Sep­tem­ber 30, 2024, the HSF’s in­vest­ment port­fo­lio re­turned 5.74 per cent and out­paced its bench­mark, which in­creased by 5.44 per cent.

“The de­clin­ing in­ter­est rate en­vi­ron­ment pro­vid­ed a favourable back­drop for both bond and stock mar­kets. Over the pe­ri­od, strong gains in the US fixed in­come and de­vel­oped eq­ui­ty mar­kets con­tributed to the Fund’s pos­i­tive per­for­mance.”

The re­port said the HSF out­per­formed by 30 ba­sis points when com­pared with its strate­gic as­set al­lo­ca­tion (SAA) bench­mark.

“Ex­cess re­turns were dri­ven by rel­a­tive as­set al­lo­ca­tion po­si­tion­ing. In ag­gre­gate, the HSF’s larg­er ex­po­sure to stocks, in par­tic­u­lar the US Core Do­mes­tic Eq­ui­ty man­date, out­weighed the neg­a­tive ef­fect of the Fund’s un­der al­lo­ca­tion to fixed in­come.

“Col­lec­tive­ly, ex­ter­nal man­agers’ strate­gies were broad­ly neu­tral. While the US Short Du­ra­tion and Non US Core In­ter­na­tion­al Eq­ui­ty man­dates ex­ceed­ed their re­spec­tive mar­ket bench­marks, this was off­set by the un­der­per­for­mance with­in the US Core Fixed In­come and US Core Do­mes­tic Eq­ui­ty man­dates,” the re­port stat­ed.

Of the to­tal net as­set val­ue of US$6.08 bil­lion as at Sep­tem­ber 30, 2024, the HSF held eq­ui­ties val­ued at US$3.08 bil­lion and fixed in­come as­sets of US$3.0 bil­lion.

In a in­ter­view with the pub­li­ca­tion Glob­al SWF, pub­lished on No­vem­ber 1, HSF chair­man Ewart Williams and deputy Gov­er­nor of the Cen­tral Bank, Do­ri­an Noel, said, “Since its in­cep­tion, the HSF has suc­cess­ful­ly ful­filled its sta­bil­i­sa­tion man­date and helped with the coun­try’s sov­er­eign rat­ing, while grow­ing its val­ue and ex­ceed­ing the tar­get an­nu­al re­al re­turn of 3.5 per cent...Look­ing to the fu­ture, the chal­lenge will be the sus­tain­abil­i­ty of HSF, which may im­ply a re­view of its fund­ing mod­el and as­set al­lo­ca­tion.”

Asaked how they saw the HSF’s as­set al­lo­ca­tion evolv­ing, and if in­vest­ments in pri­vate mar­kets would be con­sid­ered in the fu­ture, Williams and Noel said, “Post-pan­dem­ic, eq­ui­ty has con­tin­ued to out­per­form fixed in­come, with US eq­ui­ties lead­ing oth­er mar­kets. The risk en­vi­ron­ment has changed, and as a re­sult, the board has rec­om­mend­ed a re­view of the as­set al­lo­ca­tion con­struct­ed in 2008. A re­cent IMF mis­sion has re­viewed this mat­ter and is cur­rent­ly fi­nal­is­ing rec­om­men­da­tions. At this stage, we have not giv­en any con­sid­er­a­tion to pri­vate eq­ui­ties.”