By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian investment bank is reassuring local investors with up to $118m in exposure to the Trump-induced global markets turmoil that their investments are “well-positioned to ride out the chaos”.

David Slatter, RF Bank & Trust (Bahamas) vice-president of investments, told Tribune Business that its three international investment funds - created to offer Bahamian investors access to global stocks, bonds and other assets denominated in US dollars and foreign currency - “have a lot of dry powder” and are structured to minmise investor risk during market downturns.

While global stock and bond markets have somewhat stabilised, after the US president opted to pause his mass tariff hike for 90 days and impose a 10 percent “baseline” levy on all countries with the exception of China, the RF investments chief added that deciding one year ago to reduce the weighting of equities from 100 percent to 50 percent for one fund was now paying off.

But, while the initial multi-trillion dollar market sell-off has eased, uncertainty remains, and Mr Slatter told this newspaper that he expects the Bahamian economy to “slow” and “wouldn’t be surprised” if it slipped into a recession during the 2025 second half. He forecast that Mr Trump’s trade and tariff fall-out is unlikely to just be a short-term impact, with much depending on how US consumer confidence and demand responds.

RF Bank & Trust’s three international funds accessible to Bahamian investors are the Targeted Income Fund, which focuses on bonds and fixed income securities; the International Opportunities Fund that is geared towards global equity investments; and the Hedged Strategies Fund which acts as a fund-of-funds seeking to exploit the expertise of multiple investment managers.

Suggesting that he and RF Bank & Trust fortuitously acted ahead of the curve, Mr Slatter said: “The International Opportunities Fund, our equities fund, over a year ago we thought equity values were very rich and expected a recession, so we made the decision to reduce equities investments.

“Our International Opportunities Fund is now 50/50 between equities exposure and non-equities exposure. Back in the day it was 100 percent equities. We were a year earlier than we expected, but think we got it right on equity exposure. Although the equity portfolio is not doing well, the non-equity portfolio is helping to offset the pain. It’s faring better than many funds with a similar strategy.”

As for the Hedged Strategies Fund, Mr Slatter added that while returns for March 2025 were down it was still up for the first quarter as a whole. “It’s objective is to use hedge fund managers to minimise the downside risk while allowing it to benefit from the upside. The fund was down in March but, year-to-date, was still up. March was down but it’s doing it’s job.

“A lot of those managers use long/short strategies, making money when they short a stock and it goes down in value. Some of their strategies are designed to make money when prices go down. It’s designed to have a hedge against market downturns.” The Hedged Strategies Fund is RF Bank & Trust’s smallest international fund with just $14m in assets under management

The Targeted Income Fund and International Opportunities Fund have $57m and $47m, respectively, giving the trio of funds a collective $118m in investor assets under management. Besides Bahamians, Mr Slatter said investors also include expatriates and other Caribbean nationals able to participate in foreign currency investments.

He added that investor interest in all three remains solid despite the current economic and market turbulence, with the Targeted Income Fund not immune following the recent global bond market sell-off and yield surges - developments that likely forced Mr Trump into his tariff pause given the impact this was having for increased borrowing costs on the US’ multi-trillion dollar debt and the depreciating US dollar.

“They are very well-positioned to ride it out,” Mr Slatter told Tribune Business of the three funds. “The Targeted Income Fund, we’re fully invested with strong income being generated from the positions. We’ve got around $4m in cash to deploy. That’s fine, very liquid, generating decent dividends and income streams with money on the sidelines to take advantage of opportunities.

“For the International Opportunities Fund, 40 percent of it has been put into liquid income positions which we can use to get back into the equities market when it is right. We have a lot of dry powder to buy-in and add stocks when we feel it’s right. The Hedged Strategies Fund is doing what it’s supposed to do; minimising the downside during down markets.

“There’s still good interest in all the funds as far as subscriptions coming in, and all three are pretty well-positioned to deal with this uncertainty and chaos... Our US dollar funds are well-positioned to weather any downturn in the equities market. They have a lot of liquidity and cash on the sidelines to take advantage of opportunities as they present themselves.”

However, Mr Slatter warned that The Bahamas and the rest of the world economy are “not going to be immune from the battle going on between the two biggest economies in the world. We need to keep that in mind”. That is a reference to the ever-growing economic and geo-political rivalry between the US and China, both of whom have slapped triple-digit tariffs on each other’s imports of 145 percent and 125 percent, respectively.

Noting that the trillions of dollars in value wiped off global stocks following Mr Trump’s tariff unveiling will leave thousands of Americans feeling less wealthy, with their retirement investments much reduced, Mr Slatter said this was likely to be reflected in reduced tourism numbers for The Bahamas during the 2025 second half.

The threat of higher prices and lower demand among American consumers and businesses remains, despite Mr Trump’s pause until early July, along with the possibility of a US slowdown becoming a recession and even stagflation - higher unemployment and prices.

“I do expect the economy to slow,” Mr Slatter told Tribune Business of The Bahamas. “I wouldn’t be surprised if the Bahamian economy did fall into recession. Unfortunately, I don’t see what’s going on in the global trade arena working itself out in the short-term. I think we’ll be in this for a number of months, unfortunately.” 

He advised investors to “be conservative” with their equities investments in the Bahamian market, and seek out companies with “stable cash flow” and “paying a decent dividend”. The RF Bank & Trust investments chief cited the likes of FOCOL Holdings, AML Foods and banks and insurers as examples, adding: “There are a lot of local equities in mature businesses that are able to weather downturns fairly well.

“With equities you need to be thinking medium and long-term. It’s disconcerting now, but look at opportunities down the road in five years’ time and the chance to get in at some attractive entry points.” On the international markets, Mr Slatter added that stock valuations have reduced to the point where there are now “buying opportunities” but he warned investors to be cautious and strategic in how they do this.

Gold and silver were also identified as attractive hedges against further market turmoil.