Report Total Annual Returns Between 7% and 28%
Hato Rey-based investment firm X-Square Capital (X2), with over $400 million in regulatory assets under management, announced Tuesday the payment of dividends for its two funds, the X-2 Alternative Dividend Alpha Fund and X-Square Balanced Fund.
The Alternative Fund’s dividend declaration is 24 cents per share, and 20 cents per share, in Class A and Class C ordinary shares, respectively, to be paid on Thursday, July 1, to shareholders registered by Monday, June 28. This dividend amount is consistent with an annual yield of 4%, X2 said in a press release, adding that the fund registered a 28% total return, net of expenses, as of June 15.
Investments made by X-Square in the Alternative Fund include, among others, municipal bonds, mortgage-backed securities, preferred stocks, common stocks, foreign securities, and commodity-linked securities, said Ignacio Canto, president, and director of X-Square Capital.
“We have achieved this by following the Alternative Fund’s investment objective of providing a high level of current income,” said Canto, a chartered financial analyst (CFA), a financial risk manager (FRM), and one of the fund’s managers. “At X-Square we will continue to invest in corporate stocks and fixed income bonds for income generation.”
On the other hand, the Balanced Fund declaration consists of 12 cents per share dividend for Class A, Class C, and Class I (Institutional Class) shareholders, who will be paid on July 1 if registered by Tuesday, June 29. The dividend amount is consistent with an annual yield of 2%.
In a turn towards a more conservative investment portfolio following the extension of federal oversight over Puerto Rico mutual funds, X2 launched in the last quarter of 2019 the X-Square Balanced Fund, Puerto Rico’s first mutual fund registered with the U.S. Securities and Exchange Commission (SEC). The fund has provided a 7.75% total return, net of expenses, as of June 15.
“The company has followed investment objectives of the capital conservation, current income and long-term capital and income growth,” according to the firm’s press release. The statement said that the X-Square Balanced Fund invests 60% in stocks and 40% in bonds, with a minimum initial investment of $5,000 for Class A and Class C shares and a minimum of $100,000 for Class I (Institutional Class) shares.
“We are actively managing both funds, the X2 Alternative Dividend Alpha Fund and the X-Square Balanced Fund, to create the best long-term capital growth possible for our shareholders,” Gabriel Medina, CFA and funds’ manager, said in a statement.
Founded in 2013, X-Square Capital is a private firm that offers investment advisory and fund management services to provide new alternatives for Puerto Rico investors and promote optimal financial health in the short and long term. Based in San Juan, Puerto Rico, X-Square Capital is a 100% Puerto Rican capital company and is qualified as a Minority Business Enterprise (MBE).
“For the first time, investors in Puerto Rico will have access to a balanced fund, duly registered in the SEC. This represents a great step for Puerto Rico, which has been limited in recent years due to a lack of local instruments. This fund breaks drastically with the schemes of the past,” Canto told Caribbean Business in November 2019, when the firm announced the launch of the X-Square Balanced Fund. He said that the fund was established as a response to legislation passed by the U.S. Congress in 2018, including Puerto Rico and other U.S. territories in the Investment Company Act of 1940, after being exempted from the Depression Era law since its inception.
This law regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities and whose own securities are offered to the investing public.
At the closing of Nasdaq trading on Monday, the X-Square Balanced Fund Class A (SQBFX) stood at $12.55 a share, down slightly from the previous close of $12.56.