Credit union investment firm launches USD product
Published:Sunday | October 17, 2010 | 12:00 AM
The five-year-old Credit Union Fund Management Company Limited (CUFMC), having secured authorisation from the Financial Services Commission (FSC) to operate as a securities dealer in 2009, is now aggressively pursuing the building of its client base and has introduced a new US dollar investment product for credit union members and the broader investing public.
Courtney Jackson, chief operating officer (COO) of the CUFMC, said Thursday that as credit unions by law cannot offer US-dollar investments, and have been turning away individuals who want to keep their savings in hard currency, the new offering will open the wealth-building market to members.
The fund-management company, which was started by the Jamaica Cooperative Credit Union League with ownership shared between this body and 13 local credit unions, has introduced 'Investors Edge', for which the minimum required to open an account is US$500 or J$5,000.
According to Jackson, the CUFMC will allow credit union members to access foreign currency as well as Jamaican dollar wealth- management products, including fixed-term securities, unit trust, portfolio management, investment advisory services, and structured transactions.
The CUFMC was registered in August 2005 to offer mutual funds and other collective-type investments to credit unions, credit union members, and the general public. However, due to the changes made to the Companies Act and the Mutual Fund Regulation, it could not pursue its core business, the COO said.
"At the end of 2008, the directors decided to apply to the FSC for the requisite licence to operate as a securities dealer. In 2009, the FSC granted the approval. Since then, the company has been aggressively growing its client base and assets under management," Jackson said.
The CUFMC has approximately J$72 million under management. Its capital base is J$69 million.
Directors of the CUFMC comprise local credit union leaders, including chairman Johnathan Brown, Glenworth Francis, Clide Nesbeth, Astley Scott, Barrington Whyte, Barrington Laing, Hopeton Morrison, Michael Roofe, and Atherine Lee.
Investment advice
The shareholders are the JCCUL, and the AAMM, C&WJ, Westmoreland, UWI Mona & Community, GSB, Ewarton Works, St Thomas, Manchester, Jamaica Police, Hanover, Church of The First Born, Clarendon, and Portland credit unions.
Jackson said that the CUFMC would utilise the total credit union distribution network to service its clients.
"Credit union membership and the general public will be able to visit participating credit unions to transact business. Credit unions, are however, limited to assisting with the collection of funds and/or distributing our brochures," he said.
Only licensed personnel from the CUFMC will be able to give clients investment advice, Jackson added, pointing out that credit unions would only serve as distribution outlets.
The CUFMC will post licensed representatives at select credit unions, he said.
All participating credit unions will be paid a processing/transaction fee for funds collected on behalf of the CUFMC, but only shareholders will benefit from dividends, if declared.
The new Investors Edge products will be invested in GOJ, USD and JMD securities, as well as US Treasuries - areas that the COO said were currently "doing fairly well".
"There is still demand for GOJ instruments for security and yield, and the US treasury market has been growing steadily," he said.
For Investors Edge, clients will have the option of choosing their investment tenure, but most are structured for a maturity of 30, 60, or 90 days.
Jackson said based on a survey done, the expected take-up is approximately 20 per cent of credit union members, which now totals just under one million savers throughout a network of 45 credit unions nationwide.
"However, we anticipate that non-credit union members will also invest with the CUFMC," he added.