I'm in - just registering for email alerts! |
Tempus in the Times covering this today Advice : Buy Reliable income in an uncertain interest rate climate |
Down 2% today. Any clues as to why? |
Took some here Reasonable position now |
Yes, today is what I have noted as ex-div. Maybe the share price will “realise”; tomorrow! |
Watching here Wasn't it ex div today ? |
I've a full position here Credit risk looks fine and it should do as advertised - eg great in a high rate environment less so in a low one - but that's a could hedge to a lot else of what I own |
Thanks CWA1 - so at 93p to buy, the yield is 8.56% (depending on SONIA) with an annual charge of 1.28% at a 3.5% discount and they're invested in public and private debt yes? How safe do you perceive it to be overall? |
Just taken a few of these myself, so wondering if there's still any interest here?
Today's NAV announcement, a LTTLE bit up on the previous one
M&G Credit Income Investment Trust plc (the “Company”;)
Net Asset Value
LEI: 549300E9W63X1E5A3N24
The Company announces that as at close of business on 31st March 2024, the unaudited cum-income net asset value per ordinary share was 96.38 pence.
For more information please visit www.mandg.co.uk/creditincomeinvestmenttrust |
This must be one of the least exciting investments I have held, which would be fine if they had not cost me a pound! I put an equal amount in premium bonds just for entertainment value and at least there is a monthly anticipation there. It was a broker recommendation based on his commission I suspect. |
Thanks for your reply. The reporting is as you say really bad, something I had thought about but not brought to the front of my mind.
It is my guess they are getting routed money from IFA's as nothing else would explain it trading at 106p at one point when the NAV was 98p.
The recent new tranche of shares at 97p was a stitch up too when the price got rammed up on tiny volume to get the NAV high enough to issue them at a premium.
M&G have certainly damaged their reputation with me on this one.
So, I see someone has had to take 90p to sell 50k shares this morning yet the MM's have buyers at 93.5p. I'm sad to say even 90p wouldn't attract me for a yield of 2.5%. Still I expect the IFA's will keep shoving money their way like they do to Twenty Four now Invesco are out of favour. |
 CC2014 yes fully agree:
They have changed the investment policy, i guess the board is in the hand of M&G. It is another case of a sleepy board, and an investment manager in the driving seat.
They are stating that they are prudent, i actually disagree with that:
47% of the portfolio is rated BBB+/BBB/BBB-. Any downgrade to non investment grade would significant reduce the price of these exposure (shifting from Investment Grade to Non Investement Grade, different investor type etc). I dont call this portfolio split prudent, it has major cliff hedge risk if the rating agencies suddenly downgrade bonds. Particularly at this time in the credit cycle. If they want yield, probably safer to leverage high investment grade bonds AAA/AA to get the return.
The largest exposure is "M&G European Loan Fund (Prvt)", almost 10%. No information on that. And why investing in that European Loan Fund? Is it performing better than any others in the market? or is it a way for M&G to place it? the manager has a duty to invest the shareholders fund, not to syndicate M&G funds
reporting is poor. having a pretty smiling face on the first page of the factsheet is really not reporting material. just some strats and portfolio composition, no real comments. Only comment relevant in the quarterly is we bought /sold this, the rest is just macro view likely copied pasted from some research.. what about benchmark portfolio vs sector index? portfolio vs IG Main and Crossover?
This has been trading at a premium in the past (go figure), now at a small discount of 5%. Really no point buying this, they changed the investment policy, and really it should trade at a much wider discount.
There are plenty of trust providing higher yield and trading at a larger discount. |
This fund is a disgrace. I see they have changed the investment policy to be in the long term only invested in private debt and have dropped the yield target to 2.75% in the medium term.
Perhaps this is far less volatile and safer than the previous policy but changing the policy within 18 months of launch isn't good. I was lucky to avoid this one.
I see they are in the press wanting to issue more shares but only at a premium to NAV. Hard to see that happenning. |
The NAV is 100.1p and it's 105p to buy.
I can't understand why this is trading at such a premium other than if IFAs keep pointing their customers at it, it's supply and demand of shares.
MGCI is just going to keep on issuing shares until the premium disappears. |
a whopping 500,000 shares issued today at 103p. unlikely to have a impact on the persistent premium to NAV.
NAV (31.03.2019/cum income) at 100.08
Factsheet as at 31 March 2019 disclosing the following:
still decent amount of cash at 16.45%, create a drag on the income.
YTM of 3.17%. this with the ability of the company to borrow up to 30%, i am not clear on how they will be able to achieve Libor +2.5% in Dec 2019 and Libor + 4% thereafter (also worth noting that there is an annual management charge of 0.50%) |
yes oversubscribed so may be another placing soon to calm down the premium to nav? |
As expected £25m oversubscribed. |
Let's take a 10 year investment horizon and a £10k investment.
If you invested at 100 this gives (ignoring interest on interest):
10,000+(10,000*.028)+(10,000*.0479*9) = 10,000+280+4,311=14,591 = 4.59% a year
If you took up the offer at 101 this gives:
9,901+*(9,901*.028)+(9,901*.0479*9) = 9,901+277+4,268=14,446 = 4.44% a year
If you buy at 105:
9,524+(9,524*.028)+(9.524*.0479*9) = 9,524+266+4,109=13,899 = 3.90% a year
I appreciate if the base rate goes up so will the returns which you wouldn't get if you bought a fixed rate corporate bond but besides that the figures do nothing to excite me.
It's going to have to go back to 100 to get my interest and I suspect that won't happen as demand seems high. |
Thanks for summary, Yieldsearch.
Gearing to invest in bonds doesn't sound too safe to me!
Double charging: it would have to be disclosed in the prospectus. |
RNS out a couple of days ago shows people are paying 105.62 for a NAV of 97.94.
A premium of 7.85%. Excessive imho |
Low market cap, illiquid, no trading hence the price |
I really wanted to invest in this but had no spare cash at the time. I suspected it might open at a premium but the current spread of 103.75-105.5 is ridiculous, especially since the prospectus says return for the first year won't be libor+4% but something lower (2.8%? I can't remember exactly and can't be bothered to look up)
I suspect at the time of launch bond prices were a bit lower so they may have made a bit there (but not enough to cover the spread) so surely right now the NAV will be below 100p.
I'm sure the fund didn't get anything like the funds it wanted at launch so I'm even more surprised to see the share price so high.
It seems people are prepared to pay a significant premium for fixed income. I'm not sure such a premium to NAV is warranted. Time will tell. |
Thanks for starting this thread.
I'm interested, but watching only.
Here's David Stevenson in the FT:
There is now an investment trust listed on the main London market which offers something close to my ideal. M&G’s Credit Income Investment Trust now trades under the ticker MGCI, having raised £100m.
Managed by Jeremy Richards, the fund has a management fee of 0.7 per cent per annum, with an introductory rate of 0.5 per cent until the end of next year. The company has a long-term target dividend of Libor plus 4 per cent.
Although still a relatively small fund, and one that operates in a complicated, esoteric market of lending directly to businesses, I am attracted by the fact that it is managed by a world-class institution like M&G.
Initially, the fund is likely to have a decent weight in commercial real estate loans, among other types, but it also has the capacity for direct lending, and can invest in leveraged loans, bonds, private placements, structured credit and infrastructure debt.
For more adventurous investors looking for an income, I’d be sorely tempted to ditch some of the more esoteric lending funds and focus on a generalist
David Stevenson
As an investment house, fund manager M&G is well known for its bond market expertise (check out its Bond Vigilantes blog) meaning management are less likely to miss the really big trends in fixed income.
The other big positive is the target yield of Libor plus 4 per cent. This feels about right in these increasingly tough markets. Many fund managers operating in private credit markets have much more ambitious yield targets, but these inevitably involve much more risk. Investing in illiquid debt looks attractive from an income point of view until the wider economy suffers, in which case that illiquidity becomes a real problem — you can’t shift the damned loan off your books.
So far, the M&G fund is focusing on what are termed investment grade assets (with a rating of at least BBB- or comparable internal rating). This means the yield might be lower but, I would hope, more sustainable in the long term.
Many of the loans in its portfolio have some form of floating rate structure built in, which means that if interest rates carry on rising, investors will get a higher return.
For more adventurous investors looking for an income, I’d be sorely tempted to ditch some of the more esoteric lending funds and focus on a generalist. Let’s just hope that the fund managers can grow assets beyond the initial £100m before the next downturn comes along and pushes up defaults.
[I see you've linked to an earlier article of his.] |
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