Frequently Asked Questions
1. What is a mutual fund?
A mutual fund is an investment product pooling the savings of small and large investors into one company and investing those savings into a wide number of investments. When you purchase units of a mutual fund, you become a part owner of all the investments held by that fund.
2. Why do people buy mutual funds?
For the average investor, mutual funds are a convenient and affordable way of gaining access to investments that would otherwise be available only to large institutions or the wealthy. Because they typically hold 50 to 100 different investments, mutual funds offer a degree of diversification that would be difficult to achieve on your own. Experienced professionals who devote themselves exclusively to tracking the markets, analyzing investments and implementing a consistent investment strategy select these investments.
3. Who should buy mutual funds?
Mutual funds have a place in almost any portfolio. They offer a range of investment objectives that can satisfy a variety of investment needs from establishing an emergency reserve to saving for a vacation, a down payment on a house, education or retirement. Depending on your financial circumstances and tolerance for risk, there is likely a mutual fund or combination of funds that is right for you.
4. How much do I need to start?
Investors in the Growth Fund can open an account with as little as $100.00 and the subsequent minimum investments are $100.00. These minimum subsequent investments are waived if you enrol in Fortress "Direct Purchase Plan". Under the plan, you can invest as little as $50.00 automatically deducted from your bank account monthly. Investors in the High Interest Fund can start the account with $500.00 and all subsequent minimum investments are $100.00.
Investors can also swap shares they currently own in publicly listed Barbados companies for shares in the Fund.
5. Can I get my money back if I need it?
Yes, whenever you want it you can get back some or all of your investments. The Funds are designed to be flexible and meet your needs. At the end of every week a valuation is made of the market value of the investments held, and a Net Asset Value per share is calculated and published. If you are selling units, you will receive a cheque within three days of the calculation of the weekly valuation.
Currently all redemption charges have been waived.
6. Will the Fund pay out dividends?
The Growth Fund and the Accumulation Share of the High Interest Fund do not pay out dividends. Any interest, dividend income and capital gains realised on the Funds' investments are automatically reinvested in more securities which enhances your returns and increases the rate of growth in the value of the shares. Investors can realise the equivalent of a dividend by simply cashing in some of their shares at anytime. If you invest in the Distribution Share of the High Interest Fund, there is a semi-annual payout of dividends.
7. Where can I buy the Fortress mutual funds?
Fortress' funds are sold at their offices at First Floor Carlisle House, Hincks Street or at CIBC FirstCaribbean International Bank, Trustee Branch, Broad Street.
8. What is the Net Asset Value (NAV)?
The price you pay for a unit or receive when you sell a unit is called the "net asset value". The net asset value is determined at the end of each week by taking the closing market value of all the investments in the portfolio minus the Fund's liabilities and dividing this figure by the total number of units outstanding. The net asset value of a mutual fund will fluctuate weekly according to changes in the value of the individual investments.
9. Are there any charges?
Most mutual funds have an initial charge when you buy or sell units. A front-end load is charged when you purchase your units, while a back-end load is charged when you sell your units. Currently these charges have been waived for all Fortress funds.
10. What is a prospectus?
A prospectus is a legal document that outlines important information about a Fund, such as management fees and sales charges, the fund manager, investment objectives and strategies, tax considerations, fund operations and risk factors.
11. What kind of risk is involved with mutual funds?
In investing, the element of risk can vary substantially. A general rule is that the higher the potential return, the higher the risk. This is known as the "risk/return trade-off". In mutual fund investing, volatility (the degree to which a fund fluctuates in price) and return will depend on market trends, the investments held by the Fund and the investment stategy used by the manager. In general, a Fund that aims to achieve a high level of growth will be more volatile than one whose objective is to preserve the original capital. On the other hand, a growth fund will likely earn a higher return over the long term than a money market fund.
12. What about taxes?
In Barbados there is currently no capital gains tax on mutual funds and no withholding tax for non-residents.
13. Can Fortress shares be used as collateral for loans?
Yes. Most banks in Barbados accept the holdings in a Fortress mutual fund account as collateral.
14. What proof do I get of my holdings in Fortress?
Printed statements are used and are sent to shareholders on every investment they make and every financial quarter. These statements show the dates of every purchase, the amount of the purchase, the value at which the units were bought and the full value on the account.