By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian investment bank yesterday revealed its mutual funds enjoyed $30m growth during the first five months of 2026 despite facing multiple “economic crosswinds” and a subdued first quarter in the local equities market.

David Slatter, RF Bank & Trust (Bahamas) vice-president of investments, told Tribune Business that combined assets under management for its Bahamian dollar and international funds stood at $830m at end-May 2026 with all generating positive returns over the prior 12-month period despite the volatility created by Middle East conflict and the subsequent global oil price shock.

And, despite yesterday’s renewed military hostilities between the US and Iran, he voiced “cautious optimism” that the post-first quarter “rebound” in Bahamian share prices will enable RF’s locally-focused funds to finish 2026 “close to” targeted investor returns and prior year performance with investment managers “doing a job to navigate” market uncertainty to-date.

Mr Slatter, revealing that RF Bank & Trust expects to add another portfolio manager within the next year, having already expanded staff in this area, also urged Bahamian investors to adopt a long-term strategy, set aside “more of their budget for investing” and not be deterred by local and international economic turbulence as any negative fall-out will ultimately “smooth out”.

Of the $830m in assets under management in RF’s mutual funds, some $750m or just over 90 percent is held in its Bahamian dollar-denominated structures, with the bulk of that figure - $570m - invested in its Prime Income Fund. That sum, which accounts for 68.7 percent or more than two-thirds of total assets under management, again highlights the conservative, low-risk appetite of most Bahamian investors who prefer securer, lower-yielding investments such as government and corporate paper.

RF Bank & Trust’s Targeted Equity Fund, which is focused on investments in Bahamian public company stocks, in contrast generates returns which - in a good year - are near-double those delivered by its Prime Income counterpart yet it has less than one-third of the latter’s assets at around $180m. However, higher yields typically equate to greater risk, which many local investors shy away from.

“The Prime Income Fund, which invests in fixed income [instruments], was 4.8 percent for the trailing 12 months as at May 31,” Mr Slatter said of the investment returns generated over the prior year. “The Targeted Equity Fund was at 8.4 percent, and the Secure Balanced Fund at 6.1 percent.” The latter’s investments focus on a more even split between equity stocks and fixed income securities, which typically ensures it yields greater than the Prime Income Fund but below the Targeted Equity Fund.

As for the performance of RF’s US dollar-denominated investment funds, Mr Slatter added: “If you look at the International Opportunities Fund, it was up 13.5 percent for the trailing 12 months. The Targeted Income Fund, the US dollar fixed income fund, was up 3.7 percent, and the Hedged Strategies Fund was up 4.2 percent - a little lower than we’d like.”

Describing the performance of RF’s investment funds, as well as the Bahamian and international markets, as “a mixed bag”, Mr Slatter nevertheless said their combined assets under management grew by a combined $30m during the five months to end-May 2026 through a combination of organic growth and capital injections from new investor subscriptions.

“If you look at assets under management in the funds as a whole, we’re looking at around $830m between the local and international funds,” he told Tribune Business. “The bulk, $570m is in the Prime Income Fund, and $180m is in the Targeted Equity Fund. During the first five months, year-to-date, there was approximately $30m growth in assets under management for the mutual funds.”

RF, though, has some way to go to hit Mr Slatter’s goal, unveiled in January 2026, of growing total mutual fund assets under management by $175m this year to hit $950m by 2026 year-end. The investment house had hoped to achieve this by increasing the collective value of the funds’ portfolios by $100m, and attracting $75m in new investor subscriptions, but it will have to work hard to achieve this during the year’s second half.

Examining the funds’ performance over the same five-month period to end-May, as opposed to the previous 12 months or year, Mr Slatter said the Prime Income Fund had generated a 2.5 percent return for its investors. Matching that performance over the remainder of 2026, he added, would see the fund hit what it achieved over the trailing 12-month period.

“We’re moving in the right direction with the Prime Income Fund,” the RF investments chief said, adding that the Secure Balanced Fund delivered a 2.4 percent return over the same five-period, while the Targeted Equity Fund was relatively subdued at 2.5 percent. “That was a little below the trailing 12-month roll-back,” Mr Slatter conceded, attributing this to a soft Bahamian equities market in the 2026 first quarter.

“The BISX index was up only 0.5 percent in the first quarter. The first quarter, particularly March, was a tough month for local equities. There was a month there that was in negative territory,” he recalled. “There was a sizeable pull-back in Commonwealth Bank. Commonwealth Bank pulled back by 11 percent but, since then, it’s come back by 4 percent.

“The pull back in Commonwealth Bak’s stock value in March was a big part of it, and the pull back in Fidelity Bank (Bahamas), too. While other stocks were up, they weren’t sufficient to offset this. If you look at the month of May, Commonwealth is back up about 3 percent and Fidelity is down 10 percent. There are some bright spots: Year-to-date, AML is up over 46 percent; Bank of The Bahamas is up 38 percent; and Colina is up 22.5 percent for the first six months of the year.

“FINCO and Family Guardian are doing well, around 14 percent growth year-to-date. There are some bright lights, but also some pull back. It’s a mixed bag.” Mr Slatter, though, said RF continues to believe there is “upside” in Bahamian stock prices during the 2026 second half despite the ever-present geopolitical uncertainties and external shocks that remain an ever-present threat.

“Whether we get close to the trailing 12-month returns of 9 percent for the Targeted Equity Fund, we’ll see, but we’ll definitely get close to 7-8 percent,” he asserted. “On the Prime Income Fund, we expect to be close to 5.25-5.5 percent by the end of the year, and the Secure Balanced Fund to be in the 6-7 percent range. Those are the expectations.”

Describing the investment funds’ performance as “positive for the most part” year-to-date, Mr Slatter said they have had to contend with what he described as “macro economic crosswinds” created by the Middle East conflict and its impact on fuel, energy and other commodity prices resulting from the Strait of Hormuz largely being closed to shipping.

This, though, is being counter-balanced by a US economy that is still “chugging along” despite all the adversity, aided by the development of artificial intelligence (AI) technology. Mr Slatter said the addition of extra portfolio managers, and RF’s relationship with Morgan Stanley, has ensured “our ability to navigate these global crosswinds has materially improved”.

“I would say the first quarter was a little concerning, particularly on the equity front, locally and internationally, as the equity industry under-performed, but over the next two months there was a rebound in April and May,” he added. “There was a nice rebound, so now our funds are performing in line with long-term expectations.

“We’ll see what the balance of the year holds, but we are cautiously optimistic this momentum will be maintained over the second half of the year. We realise there are risks to be navigated, but feel we’re doing a good job navigating them.”