Twentyfour Income Share Discussion Threads

[cc2014] 03/10/2022 21:40

And there's the issue with this fund. It's lost 7% of its nav in a week

[badtime] 03/10/2022 21:00

You now have an updated NAV

[stun12] 03/10/2022 09:49

Hi JonG. See posts 139-144 on this board. The problem is that we only have last week's NAV figure, and it will be recalculated for the tender. So if NAV is measured at 100, the tender would be at 98p. I have no idea how TFIF sets valuations on their portfolio. Many of the ABS holdings are quite obscure issues at the lower end of the ratings ladder, so all pretty illiquid.

[jong] 03/10/2022 09:33

I have just received the following corporate action for TFIF in my Halifax SD ISA account.

I haven't seen any RNS news about this and no mention on here?

Has anyone else had a similar notification and what are people's views on the likely redemption price assuming it is correct. I would assume NAV price on the day would be fair.

"Voluntary Redemption.

Opportunity to redeem your TwentyFour Income Fund Ordinary shares at a rate yet to be determined.

Should you wish to accept the Offer, elections to Redeem all or part of your shares will need to be made by the Advice Date of 23:59pm on 9th October 2022.

Please be aware that if you make your election by post your election must reach us by no later than 7th October 2022. Any elections received after this date will not be accepted. If you have any concerns that your election will not reach us in time, please contact us by phone prior to the deadline and we can log your election.

You Have The Following Options:

1 Accept the Offer and redeem your holding.

If you elect to accept the Offer, your stock will not be available for you to sell. However, the stock will show on your portfolio until the Corporate Event is finalised. Please note that if you accept the Offer and proceed to sell your stock, you may be liable to buy back costs.
2 Accept the Offer and redeem part of your holding.

If you elect to accept the Offer, your stock will not be available for you to sell. However, the stock will show on your portfolio until the Corporate Event is finalised. Please note that if you accept the Offer and proceed to sell your stock, you may be liable to buy back costs"

[stun12] 03/10/2022 09:29

FF - Lack of demand at the AAA level, mainly. The smaller issue size ensured a decent reception in the end. They sold £251m of AAA and had demand for ~£400m which would have almost covered the full size of the warehoused loans, but would have left them vulnerable to a very skittish market. In retrospect, they did very well with HH2 - not sure where it would price now...

[future financier] 03/10/2022 08:49

stun - looks like there is somebody offloading big time - probably just wants out of a "fixed interest" security. I am also loosely involved with ABS - why do you reckon that HH2 only used 65% of the available pool? - just holding on for better prices in the Spring?

[stun12] 30/9/2022 10:41

Picked up a few more at 99.43p. They showed as sales as close to the bid side - seemed to be plenty around, though the last trade is showing as 101.5p now (possibly an odd lot as I don't have real time pricing).

[stun12] 29/9/2022 20:12

Thanks, FF. Own some since the UKML days. I am loosely associated with the ABS market. So no major drop in NAV, the current TFIF representing an unusual discount. UKML was almost 30% under NAV when I bought some at 55p (hit 45p at one stage, I believe, but I was way too scared).

[peterbill] 29/9/2022 14:31

Just added some here, couldn't resist.
Will be holding for the yield.

[future financier] 29/9/2022 12:27

stun - RNS on Tuesday - 102.38p

[stun12] 29/9/2022 09:18

FF - True. Hops Hill did OK, though it didn't utilise the entire mortgage pool (£300m from a possible £463.9m). The turmoil is supposed to be generally a good thing as spreads widen, reinvestment amounts securing higher yields. The MTM on sterling assets might be a bit ugly though, and future access to the market for forward flow may be a consideration. Was there a recent NAV report, by the way?

[future financier] 29/9/2022 08:26

stun - Particularly surprising given that TFIF successfully launched a securitisation last week at the start of the current storm in the markets and so have reduced any potential impact of the current "turbulence". Maybe it is the NAV decline?

[badtime] 28/9/2022 19:41

Yes..I was just intrigued that it had held up in the turmoil over the last few days ..and then suddenly a 4% dip

[stun12] 28/9/2022 16:18

Sentiment in the asset-backed market, especially sterling, is pretty poor. A prime UK rmbs was due this week from Yorkshire Building Society, but has been pulled. It's surprising how closely linked to micro moves in the ABS market both UKML and TFIF have been.

[badtime] 28/9/2022 15:46

Wonder what caused the sudden dip

[ammons] 21/9/2022 12:55

Re the Telegraph article.

How to secure 14pc returns – even as we head into a recession

Questor investment trust bargain: this fund’s divi is in line for a boost and its assets should follow suit for a double-digit total return
By Richard Evans 15 September 2022 • 6:00am

For that elusive combination of high returns and low risk, Questor has tended to favour either specialist property funds or specialist bond funds.

Our thinking is that the professionals who run these portfolios develop such deep understanding of their markets, and have cultivated such fruitful networks of the contacts on which successful deal-making in these areas often depends, that they can buck the normal rules of investing and unearth assets that really can deliver good returns at disproportionately low risk.

Among the property funds tipped here, we would put into this category the likes of Residential Secure Income, Triple Point Social Housing and Regional Reit; for bond funds we would mention Real Estate Credit Investments, BioPharma Credit, Honeycomb – and TwentyFour Income, the portfolio we cover today.

The share price chart since we first tipped the fund in 2018 at 116.5p may seem uninspiring; with the shares at 104.5p we are in the red to the tune of 10.3pc in capital terms. But this is to ignore its income – the portfolio has exceeded its dividend target of 6p a share every year since it listed in 2013.

What is more, we can now expect big increases in the divi, and indeed in the fund’s net asset value and hence in all probability in the share price too, because of the way the portfolio’s assets work.

There are two forces at play here. First, the managers invest in “floating̴9;rate” assets, so rises in interest rates mean more income for the fund.

The second is more complex. The market value of many of its assets has fallen in recent months as investors more generally have sold bonds in response to the rise in inflation. But TwentyFour Income’s managers tend to hold their investments until they mature – which of course they do at “par” value, or the amount originally lent when the bonds were issued.

As the maturity date approaches (and the fund’s assets are about three years from maturity on average), the market price naturally tends to rise back up to the par level at which investors will be repaid. And, when the money from matured bonds is reinvested, it will generate higher interest rates if used to buy other bonds at depressed prices.

None of this, obviously, would hold water if the more perilous economic times we are entering led to a spate of defaults among the fund’s bond holdings. But this is where that specialisation on the managers’ part we referred to above comes into its own. Such is their skill at assessing the creditworthiness of those they lend to (and mortgage borrowers in Britain and Europe, via “mortgage̴9;backed bonds”, account for about 60pc by value) that the fund has never suffered a default.

“TwentyFour Income has never held an investment that has defaulted, nor has it ever held a position that has subsequently defaulted after it owned it,” said Numis, the broker, last month. “There are no credit‑impaired positions in the portfolio and bonds have been underwritten against adverse scenarios more severe than the global financial crisis.”

Let’s return to the rising income we can expect thanks to increases in interest rates.

“We expect the [fund’s] dividends for the current year to be substantially higher than the prior year given the rise in base rates,” Numis said.

“We see scope for a dividend of 8.6p‑9p, equivalent to an 8.3pc‑8.7pc dividend yield on the share price [almost unchanged since its note], based only on the change in market expectations for UK interest rates. This is assuming there is no benefit from reinvesting any [bond repayments] at the current attractive [rates].”

But the broker said it could see scope for “an even higher dividend” as more of the portfolio’s bonds matured and the proceeds were reinvested at better rates. For the year to March 2024 “we could see scope for a dividend of about 10p”, it said, although it said “a lot could change between then and now”.

But we also need to consider the potential for capital gains as the prices of its bonds drift upwards towards par value as maturity approaches.

Adding together the yield and these likely capital gains, Numis said “total returns in the medium term should be closer to … about 14pc [a year]”.

Fourteen per cent from a bond portfolio that has never suffered a default is a very attractive proposition. Buy.

Questor says: buy

Tickers: TFIF

Share prices at close: 104.5p

[return_of_the_apeman] 21/9/2022 12:45

Answer may be in here but its behind a paywall so can't read it

[return_of_the_apeman] 21/9/2022 12:42

7p plus any excess returns


The Company recently announced (11 August 2022) the Mark-to-Market yield and
Forward Yield to Maturity of its portfolio at 13.0% and 14.9% respectively.
Given the strong cash flows, being generated by TFIF's investments, where the
purchase yield of the portfolio has increased by 2.14% to 10.11% over the last
nine months - an incremental pick-up of almost 50bps compared to the 1.65%
increase in base rates in the same time - the Company is increasing its minimum
annual dividend to 7p per share through the payment of three quarterly
dividends of 1.75p per share and a final dividend of 1.75p per share plus any
excess returns in respect of a financial year.

[panshanger1] 21/9/2022 07:38

BIPS upped its quaterly dividend today too - hope it's a trend bond funds (and reits !!) taking a helluva beating atm

[cwa1] 21/9/2022 07:34

Nice work:-

Increase in minimum annual dividend to 7p (from 6p) per Ordinary Share

The Board of Directors of TwentyFour Income Fund ("TFIF" or the "Company") is
pleased to announce its plan to increase minimum dividend payments above its
annual target. The Company will increase minimum annual dividends from 6p to
7p per share with minimum quarterly dividends increasing from 1.5p to 1.75p per
share beginning in respect of quarter end 30 September 2022. The Company will
continue to distribute all its annual net income to shareholders through a
final balancing dividend.

[stun12] 16/9/2022 08:23

TwentyFour offer to repurchase shares at a set discount to net asset value. It's a reverse tender, so you apply to sell, say, 1000 shares and the acceptance level will depend on how many other shares are tendered. So you may end up selling 200, or 500. As the discount to NAV was lower than the market bid at the time, it didn't make any sense to take up, and it has since fared better anyway.

[petercarley] 15/9/2022 18:41

Sorry if I'm sounding a bit of a "Thicky" but can somebody in words of one syllable explain the “Ins and Outs” of this offer. I've a small batch of TFIF shares and have been happy with the yield so can see no benefit in taking up the offer.

What am I missing?

Pete
e

[stun12] 01/9/2022 12:40

NAV is a bit nebulous with asset-backed securities, never mind the future flow warehousing. Happy to sit here with the yield and it should be relatively low risk. Hopefully.

[cc2014] 01/9/2022 12:23

Well since the NAV was 103.55p in the middle of last week and is likely to now be lower, it might be best to sell them at 102.5p if you are so inclined.

[stun12] 01/9/2022 12:18

I think the tender is at 102 and a bit pence.