Lissant Mitchell, senior vice-president of Scotia DBG Investments. - File

In a bid to boost revenue and diversify away from its heavy reliance on interest income, Scotia DBG Investment, the investment and brokerage arm of banking giant, Scotia Bank, is turning to the regional bond market, with the newest of its bond instruments, a US dollar-denominated Caribbean Income Fund (CIF), set to be launched within the next two months.

Fearing losing the surprise advantage over its competitors, the brokerage house is guarding details of the new product, but says it is slated to hit the Jamaican market at the end of July.

This is being billed by the Anya Schnoor-led outfit, as the first in a series of new instruments to be retailed to potential investors, with other unit trust-type vehicles said to be in the pipeline awaiting the green light from the financial services regulatory watchdog, the Financial Services Commission (FSC).

"The intention is to launch the Caribbean Income Fund this quarter. We are already one month into the quarter so the aim is to get it done as soon as possible, at least by the end of July," Lissant Mitchell," Scotia DBG's senior vice-president said this week.

The new mutual fund is expected to be invested in Caribbean US dollar-denominated debt.

Joins Us, canada portfolio

The CIF, Scotia DBG's 45th investment offering, joins a portfolio of 36 US and Canadian dollar mutual fund products, including money market, US dollar bond, US growth, global growth and a Canadian growth fund, now being marketed by the firm.

Information from the brokerage company's website explains that subscription to the fund can either start with an initial investment of US$1,000 with monthly payments of $100 thereafter, or at $5,000 with subsequent minimum investments of US$1,000 required monthly.

At the end of October 2008, the investment house had $96.8 billion in investors' money under management, including mutual funds.

Other investment products are on the way, according to the Scotia DBG executive.

"The other funds we intend to launch will be to a large extent a function of or dependent on the opening up of the unit trust market by the FSC."

Last year the firm launched the Caribbean Income Fund in Trinidad, but the product was not available to Jamaican investors because it had not been approved by the local regulators.

Since then, Rohan Barnett, the new FSC boss has announced his intention to lift the moratorium on new unit trusts here and promised to resolve taxation concerns that have been raised as a deterrent to the creation of mutual funds in Jamaica. The Financial Gleaner was unable to obtain an update from the FSC on progress on these promises.

For Scotia DBG, aggressively growing fee income from such instruments is important especially in light of lower interest rate expectations.

At October last year, net interest income, the earnings from interest on assets after paying out interest liabilities, accounted for 77 per cent or just under $2 billion of Scotia DBG's total $2.6 billion of net revenue, with fees and other income contributing a mere nine per cent.

Securities and foreign exchange trading accounted for the remaining 14 per cent.

When viewed against operating income for the second quarter to April, net interest income commanded an even bigger share at nearly 84 per cent or $835 million of the investment house's $996 million total operating income for the period.

Other revenue, including fee income and net earnings from foreign exchange trading sent $161 million to the company's bottom line.

"With the whole concerns of migrating business from off balance sheet to on balance sheet, we believe that these products are going to be very important for us to achieve those objectives," Mitchell noted.

sabrina.gordon@gleanerjm.com