Nunavut Trust scores record-high investment gains
How should NTI spend an $11 million surplus from the Nunavut Trust? Some say it should be used to pay down NTI’s debt, while others says it should be divided up among individual beneficiaries.
IQALUIT — Nunavut Trust has returned record-high investment earnings for the fiscal year ending Dec. 31 and will distribute $31.6 million to Nunavut Tunngavik Inc..
That leaves the Tunngavik with an $11-million surplus, which board members, who plan to meet June 7, must now decide how to spend.
Kusugak wants individual cash payments
At least one prominent NTI executive member is calling for a first-ever cash distribution to individual land claim beneficiaries.
“We’ve been saying this for a number of years, that we hope the people can receive dividends from the investments and this might be an appropriate time to look at the possiblility of actually handing the $11 million back to the beneficiaries,” NTI President Jose Kusugak said this week.
Nunavut Trust manages the cash compensation money paid by the federal government to Inuit beneficiaries under the terms of the Nunavut land claim agreement.
The 1998 returns will more than pay for NTI’s projected $20.6 million budget this year.
Kusugak said he recommends using the $11 million surplus to pay cash dividends to ordinary beneficaries, because NTI is two years ahead of its 15-year plan to repay $93 million in start-up loans from Nunavut Trust.
“That’s what people have been asking and here is the answer,” Kusugak said. “We have it in front of us.”
Just how much of the $11 million could end up in beneficiaries’ pockets, if any, will be up for NTI board members to decide, but it appears not everybody supports the idea of a cash dividend.
Pay NTI’s debt?
In a joint news release this week, Trust chairman Peter Kritaqiluk and Bernadette Tungilik, NTI’s vice president in charge of finance, suggested that the money should be applied to the debt.
According to the Canadian Trust Universe Comparison Service, Nunavut Trust’s 17 per cent return ranked in the top one percent of all funds with more than $100 million invested last year.
“We never expected gains to be this high, no way,” Andy Campbell, the administrative officer and CEO of the Nunavut Trust said. “We’re very pleased.”
As late as last September, sharply declining Canadian stock values threatened to wipe out earlier gains, and it was projected that the fund would end the year with a market value of about $401 million.
Instead, the Nunavut Trust holdings were worth $475 million at Dec. 31, 1998, Campbell said, with a book value of $417.5 million.
Campbell attributed most of the Trust’s stellar performance in 1998 to exceptional gains from investments in European and U.S. stocks.
Unlike most other pension funds in Canada, the Nunavut Trust is not restricted by foreign content regulations.
58 per cent return
Campbell said Nunavut Trust’s foreign assets manager returned a whopping 58 per cent return on investments.
“I think what we saw, and what changed things, is we didn’t expect our foreign funds manager to do as well as he actually did,” Campbell said. “How could you expect anybody to do above 50 per cent?”
But Campbell cautioned that financial markets are subject to occasional downturns, and that there will be years when returns aren’t so attractive.
“Strange as it might seem, the better you do, the more likely you’re not going to do well in the following period,” Campbell said.
Nunavut Trust’s long-term mandate is to build and preserve the $1.1 billion nest egg that Ottawa will pay Inuit land claim beneficiaries by the year 2008.