CEO of the newly rebranded VM Group and VM Wealth Management, Rezworth Burchenson, says asset allocation is key if investors want to protect their portfolios against inflation.

Asset allocation speaks to a strategy where investors try to balance risk and reward by apportioning their portfolio’s assets according to their goals, risk tolerance, and investment timeline.

“I think this has been the problem with Jamaicans over the years, is that we have been investing but we’re not keenly aware of the real returns that the investment is returning. So, they invest and 5, 10 or 15 years down the line they look at their investment and something is wrong,” Burchenson added.

The Statistical Institute of Jamaica said that the year-to-date inflation rate for November was 8.2 per cent. Inflation is the decrease in the purchasing power of money, caused by a general increase in the prices of goods and services. In other words, your money is worth less as prices go up. 

Speaking with Kalilah Reynolds recently, Burchenson noted that many Jamaicans have lost their wealth to inflation because they did not properly allocate their assets.

He said that while the best way to allocate assets will vary from person to person, the best performing assets over the past four decades have been equities and real estate.

“I’m not saying that everyone should go and take everything from their account and put it into equities, but too many Jamaicans have seen their wealth dissipated because they are not properly allocating,” he said.

He said that with the economy rebounding from the COVID-19 pandemic, now is the best opportunity for Jamaicans to create wealth.

Noting the IMF’s prediction that Jamaica’s growth will be about eight per cent next year, Burchenson said he was optimistic about the country’s economic recovery. 

He pointed to the resurgence of tourism, which he said plays a major role in the country’s economy, as proof that the economy is rebounding. 

This, he believes, will create opportunities for Jamaican investors.

“We see opportunities in equities. What are the companies that will do well next year? What about the real estate space, I’m not talking the residential space, I’m talking the commercial space … to what extent are persons positioning themselves in equities and real estate to capitalise on the upside next year and the years to come?” he queried.

Opportunities in commercial real estate

In regards to real estate, Burchenson said the group remains bullish about commercial real estate.

“We believe commercial [real estate] is largely ignored, that’s one, and we believe commercial [real estate] is more scalable than residential,” he explained. 

He said however, that the company is flexible and may consider doing a residential real estate fund or a residential or commercial real estate development fund.

“We look at the market, we look at what our investors are asking for and we try to provide a solution,” he said.

Meanwhile, VM Group reported a 69 per cent net profit increase for the nine months ending September 30, compared to the same period in 2020. 

Burchenson said that the growth can be attributed to the framework the group established to track the company’s performance.

“One of the things we do is create a framework to ensure that we are monitoring and tracking key results but also to what extent are we building a business that can sustain that growth and also ensuring that employees grow with the organisation,” he said.

He also noted that the company keeps abreast of current market trends.

Burchenson also noted that VM Group leveraged their recent BBB+ investment rating from Caribbean Information and Credit Rating Services (CariCris) to raise $2.3 billion in capital.

These are funds which he said the company will use to accelerate its lending business.

“The objective with CariCRIS was that we need to show Jamaica and the Caribbean that we are a strong institution,” he explained.

“The capital that we’ve raised to accelerate our lending initiatives; whether it be margin loans, lending to corporations, lending to individuals, whatever it is,” he said.

Expansion into Barbados 

Speaking on expansion, Burchenson said the company is pleased to have acquired Barbadian asset management company, Republic Funds. 

“Barbados is an economy where the GDP per capita is much higher than Jamaica. It is a market that is still growing and developing,” he said.

Noting that Barbados’ equities market is not as active as Jamaica’s, Burchenson said he sees the acquisition as a chance to change that.

“Jamaica’s equities market 10-15 years ago wasn’t as active as it is now, and we have done a number of things, both VM Wealth and other dealers, to grow that space,” he said.

“We believe that the market skills, marketing programmes and awareness programmes that we have done to elevate the Jamaican situation can be done in Barbados,” he added.

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