Jamaica’s securities dealers are sitting on relatively high levels of cash within a market affected by uncertainty.
Cash holdings in local collective investment schemes (CIS) surged 40.2 percent to $18.5 billion in the quarter ended September 2025, up from $13.20 billion a year earlier, according to quarterly data released this week by the Financial Services Commission (FSC).
The increase represents a marked shift in portfolio composition among the island’s investment funds. Cash still accounts for the second-smallest holding in asset classes, but the rise signals that funds were pulled from investments categorised as ‘other assets’ by the FSC.
“During September there was a major corporate maturity and in our case we chose not to go back in that security. So our cash position went up,” indicated Bob Russell head of asset management at VM Wealth Management in an interview.
He noted that, following Hurricane Melissa in late October, cash positions across the sector would likely rise further. That’s because institutional holders of CIS investments such as insurance companies, would liquidate some of their positions to maintain a cash buffer for claims.
Collective investment schemes — known locally as unit trusts and mutual funds — are pooled investment vehicles where multiple investors combine their capital under professional management. These schemes offer retail and institutional investors access to diversified portfolios of assets that might otherwise be difficult to access individually. While cash jumped, other asset classes rose, but to a lesser degree. Real estate increased 11.5 per cent, fixed income grew 9.5 per cent, equities grew 3.3 per cent, while other asset classes decreased 12.4 per cent, the FSC data indicated.
Jamaica’s CIS industry up to September comprised 20 funds with 78 distinct portfolios, holding $409.7 billion in total assets. The sector has grown 11.61 per cent year-over-year, even as securities dealers have reduced their overall funds under management.
“The rise in cash is not necessarily a defensive play,” said the head of brokerage firm who choose to speak on condition of not being named. “I do not think it’s fully accurate to interpret it as such. Yes, there was a rise in cash, but if an instrument did not mature during the period, then cash would have moved roughly in line with total sector.”
That said, cash positions as a percentage of total CIS portfolios increased from 2.0 per cent in 2023 to 4.5 per cent to 2025.
The cash buildup comes as securities dealers—the 19 core firms that dominate the market—posted a turnaround in profitability. Net profit before tax reached $14.0 billion for the nine months through to September, a staggering 950 per cent leap from the $1.65-billion net loss recorded in the same period last year. Firms were affected in the previous year due to market uncertainty and Hurricane Beryl damage. The December quarter will likely reflect the impact of Hurricane Melissa.
Yet, this financial success has been accompanied by a notable contraction in the firms’ core business. Aggregate funds under management tumbled 6.88 per cent quarter-over-quarter to $1.65 trillion from $1.78 trillion in June. Year-over-year, funds under management also declined 3.65 per cent.
The profit surge among securities dealers was driven primarily by the “growth in total revenue”, in turn driven by “trading” gains on debt securities, stated the FSC in the quarterly review.
Total revenue for the nine-month period climbed 23.7 per cent to $68.8 billion, while total expenses fell 4.30 per cent. Non-interest income — which includes trading profits on debt securities — soared 76 per cent year-over-year. The sector’s return on equity reached 9.70 per cent for the nine months through to September, compared to just 2.67 per cent in the prior-year period.
Capital levels remained robust at $145.6 billion, yielding a regulatory capital-to-risk-weighted assets ratio of some 22 per cent — well above the FSC’s 14 per cent minimum benchmark.
