Dear valued investors,
Thank you for your interest in CAL unit trusts. Our fund has taken advantage of the abnormally higher returns on government securities by increasing the fund’s exposure to Treasury bonds over the last few months. This move has allowed us to lock in higher returns for our unitholders. As expected, market interest rates have started to decline, which will further benefit our investors.
However, Treasury bonds are longer-term securities, and as such, the SEC requires us to mark to market these positions on a daily basis. This daily marking to market can cause day-to-day unit price volatility, reflecting the movements in Treasury yields. For example, if T-bond rates move up due to short-term volatility, the unit price can come down, and vice versa.
We understand that such short-term volatility can be misleading to our investors and would recommend our investors to look at slightly longer-term returns, such as monthly returns, as opposed to daily returns to gauge a more accurate picture of the returns accumulating in the fund.
While there have been some negative fluctuations in the unit price over the past few days due to temporary increase in treasury yields, we would like to highlight that the annualized return from March 1st to April 20th is 28.42%, and from April 1st to April 20th is 31.24%%. This is due to the fund’s significant price gain between April 3rd and April 6th, when interest rates declined, which helped offset the impact of a few days of negative returns.
To help you keep track of your returns, we have created an online calculator that you can use to check your returns over a selected period. You can access it here: https://cal.lk/unittrust/calculator/.
Given Sri Lanka’s recent agreement with the IMF and the expectations of the Central Bank of Sri Lanka, we believe that interest rates are likely to continue to decline, which should allow our investors to make larger price gains in the months ahead.
Thank you again for investing in CAL unit trusts, and please do not hesitate to reach out to us if you have any questions or concerns.
The CAL Unit Trusts Team