Research History

TwentyFour Income

TFIF is a rare way to access a high-yielding asset class…

Disclosure – Non-substantive Research

This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour. 

TwentyFour Income

TwentyFour Income Fund (TFIF) aims to generate a high annual income for investors of at least 6p on the issue price of 100p, with a total return of 6% to 9% p.a., by investing in the higher-yielding, less liquid parts of the pan-European asset-backed security (ABS) market.

It pays a quarterly dividend distributing all income each year, and has met its dividend and total-return targets each year since launch in 2013. In fact, the board is committed to holding a continuation vote if TFIF fails to hit its dividend target in any financial year. The current yield is 5.9%.

The investment universe includes mortgage-backed securities, both residential and commercial, collateralised loan obligations and assets backed by consumer and student debt. All are floating rate, meaning they carry minimal interest-rate risk. Major risks are credit risk, regulatory risk and stock-specific risk. We discuss the securitisation structure in the Portfolio section.

TFIF is run by a specialist team at TwentyFour Asset Management. They use their expertise to invest in this relatively esoteric, illiquid asset class and a number of the team members have experience as originators of ABS as well as buyers. This, as well as the closed-ended structure, allows them to take advantage of the inefficiencies in the market and the smaller unrated deals which can fly under the radar of larger investors.

The trust has a five-year average premium of 2.7%. This has allowed the board to grow the trust by issuing shares although, as we discuss in the Discount section, this only happens when the managers believe this will not dilute the quality of the portfolio.

Thomas McMahon
Thomas is a senior investment trust analyst and joined Kepler in April 2018. Previously he was senior analyst at FE Invest, where he was responsible for fund selection for a range of model portfolios. He covered all asset classes over time, but has particular experience with emerging markets and fixed income as well as UK smaller companies funds. He has a degree in Philosophy from Warwick University and is a CFA charterholder.

Fund History

Related Research

Key facts

Investment objective

To generate attractive risk-adjusted returns, principally through income distributions

As at:

06/03/2020

Trust Name

TwentyFour Income

Ticker

TFIF

Management Company

TwentyFour Asset Management

Manager Names

Rob Ford; Ben Hayward; Aza Teeuwen; Douglas Charleston; John Lawler;

Association of Investment Companies (AIC) Sector

Debt-structured Finance

12 Mo Yield

5.9%

Dividend Distribution Frequency

Quarterly

Latest Market Capitalisation

£552,662,716

Latest Net Gearing (Cum Fair)

-2%

Latest Ongoing Charge Ex Perf Fee

0.95%

Turnover Ratio

60.1%

Shares Outstanding

504,714,809

(Discount)/Premium (Cum Fair)

-2.0%

Daily Closing Price

109.5p

Source: Morningstar

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