Iqaluit (Nov 20/06) - The future of the Nunavut Trust is a lot like hunting a seal, the fund's manager told delegates at Nunavut Tunngavik's annual general meeting in Iqaluit Nov. 14.

Just like there are more seals to be found near risky, thin ice, the Nunavut Trust will have to take some risks in the market if it's going to provide long-term profits to Inuit, trust manager James Arreak said.

"If we want a better return we're going to have to go on thin ice," he said.

The trust was established in 1993 to invest the $1.1 billion Nunavut Inuit received as part of the land claim agreement. Ottawa's annual payments to the fund end in 2007, and Arreak says NTI and the regional Inuit organizations have to prepare for the end of the contributions from Ottawa.

Annual funding to the regional organizations, which draw the bulk of their operating budgets from the trust, has to be reduced to four per cent of the trust's $1 billion market value to be sustainable over the long term, Arreak said. That spending rate has dropped from almost 29 per cent in 1993 to 4.2 per cent in 2005, the last year for which figures are available.

Growth in the fund's market value grew dramatically over the late 1990s, when stock prices were on the rise, but declined after 2001 when stock prices tanked.

Fortunes reversed in 2004 and the fund has grown every year since, according to the trust's own figures. Returns were 11.2 per cent in 2005 and the trust has outperformed similar funds over the last decade, Arreak told delegates.

"We have to have a long-term vision because when you look too close you get concerned," he said. "There is fluctuation in the market and that is normal."

Nunavut Trust will adjust its stock portfolio to provide constant and growing returns, Arreak said.

Andy Campbell, the trust's chief executive officer, said he's confident in the fund's future.

"There are lots of studies around that show large endowments that have been around for a couple of hundred years pay out about four per cent (per year) on average," he said.

But he added the typical stockbroker's warning.

"As long as something dramatic doesn't happen..."