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To generate attractive risk-adjusted returns principally through income distributions by investing in a diversified portfolio of UK and European asset-backed securities.
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I think taking the fees from income rather than capital although understandable would nevertheless appear to be a change of policy from prior years where they've aimed to distribute all the income they've received. Perhaps they might clarify and confirm the change of poliicy (and why).
Also, I'm not sure that I follow the "income drag" comment. I would imagine that the purchase yield is forward looking; in which event crystallising trading gains (which I'm assuming is akin to selling shares cum dividend) and posting all the gain to NAV is a bit of a "cheat" (IMO part of the gain would be attributable to the interest foregone and that element should be posted to income to "square the circle").
If you have seen todays fact sheet you will have noted that MTM has fallen and the PY has increased (to 11.7%). Twentyfour have now clarified why there is a difference between these published factsheets and 'actual' yields.
-'fees will be taken from the published purchase yield and this is c. 1%. There has also been an income drag because we’ve had crystalised trading gains throughout the year (which has gone through the NAV). The total combination of these will make up the difference between the two figures'
Hope this helps. It will certainly allow us more insight into future dividends. In the past my holdings here were smaller and I never really probed into the divi payments (it gets more complex if the base rate changes throughout the year)
Compared to most other IT's I cannot fault the customer service at Twentyfour who have been very good at responding to my questions.
As always Twentyfour were excellent at responding (within hours). From one of the comments I think that they were expecting a slightly higher divi themselves!
I didn't get a reason for the difference between the purchase yield and the 'actual' yield so I will chase this up on another occasion.
The comment from the portfolio managers were that the yield last year was higher because of unexpected UKML crystallisation, also 'profits have been taken on deals pre maturity as part of usual trading in 23/24 and that was recognised as capital gains (and therefore in the NAV).'
Hopefully it will be clearer once the annual report is published.
I was hokng for about 5p. not a cut on last years final div. What a wash out!
No! I am really surprised.
I was expecting 5p and hoped it could be 5.5p As you say the purchase yield has been constantly at 11%+ so it would be interesting to hear their comments on this.
It puts it around a 9.5% yield on the current share price and 9.1% on the last nav - someway short of the last quoted purchase yield of 11.4% in the Feb factsheet (when the share price was 104p).
That takes the total dividend for the year ended 31 March 2024 (FY24) to 9.96p (FY23: 9.46p). Can only assume/hope that they're keeping some FY24 income in reserve so that they can increase the dividend payout again in FY25. I don't see any likelihood of them increasing the minimum quarterly dividend payout above 2p at this juncture.
Any thoughts Momk?
3.96p! That's quite a bit less than I'd been expecting. Given that the puchase yield has been consistently above 11% for the last 12 months and their previously stated intention to distribute all income received (meeting expenses out of capital), I was expecting at least 5p minimum.
Last year it was at 16.27 on the Thursday. Note that SMIF has this afternoon declared an increase in dividend.
TFIF tends to declare its dividends either mid-afternoon or after markets close, so there may be annoucement later this afternoon. Watch this space.
At the top but it says Apr 12th further down 🙄 so it might be tomorrow
Div Max says it’s due to be declared today.
Last year it was. announced April 13th so prob tomorrow or. Monday
Does anyone know when dividend will be announced
Thank you
Finally bought in with ordinary trades at an expensive 105.7 after a bunch of cheeky limit orders failed last few days. That should teach me. Top sliced my SWIF a while ago and wanted to make sure I held before the next Dividend (final) announcement here.
Cheers all and GL.
An interesting question, this is very much my interpretation.
I was not invested in it 2015 (dip 1 ) - but I think that may have been due to the Euro crises. Dip 2 was Covid and dip 3 was the start of the interest rate hike. I think it is the fear of defaults which results in the fall in price, as this recedes then investors return.
The issue then is why does it not return to previous highs. Clearly there is the general malaise of the UK stock market post 2016 which capped its rise from that year, and then when it was heading back up post covid the fear of recession caused by interest rate hikes again stopped its accent .
The really interesting (and probably more important) question is what next? With the BoE and the ECB now having switched from QE to QT the cost of finance is very likely to be higher, this should enable a higher return from TFIF provided defaults do not increase significantly. The key to the latter is unemployment, if this stays low, which seems likely, as it is in part a function of the demographics of the countries TFIF invests in, then the returns going forward could remain higher than in the years pre covid (and the sp could potentially rise at least to its previous levels).
(note- There was the merger with another fund at the start of 2022 but I don't recall that having significant effect on the price.)
Hi Monkshood,
Thank you for the fulsome response. Appreciated.
Have speed-read the posts on here, but will go over them all again in due course. However, it’s clear you do have a v good grasp of CEF’s; whereas personally, as an experienced investor in equities, I’m a novice at these type of instruments. And that leads me (as a life-long trend follower) to the following observation -
I’m curious as to the mindset of investors who are long term holders in this Closed-Ended Fund.
And it’s this - Since its inception back in 2013, each significant SP peak (when stripped of its dividends) - [I make it about 4 significant peaks with currently what looks like the early stages of the next journey to a peak] - is lower than the significant peak that preceded it.
So for the entire duration of its public existence, TFIF, if held for several years means that those investors have, today, less capital (or principal as some term it) than they commenced with.
However, with the dividends built back in, and accounted for in the SP, then the whole thing reverses and it’s a glorious SP chart of bottom left to top right corner, for the progress of the SP.
Therefore it appears, that if not a single dividend was withdrawn, but rather left in the account and added to the starting capital, then the investor has considerably more capital than they commenced their investment with - but only if you collected all the dividends.
(In general I’ve found that a discounted NAV is present during pullbacks/down trends, and at a premium when/during up trends in the SP).
Am I correct/incorrect in that assumption on the history of the net SP when dividends are stripped away, investors have less capital?
- Or only when including dividends, have investors of many a years holding in TFIF, effectively increased their capital holding?
Q1-
Given the purchase yield, previous divi's paid this year and the income stated in the half year report I am expecting a final divi of 5-5.5p.
Q2-
This is the only one from Twentyfour that I hold. I have Bips for income in the HY bond sector and adjust the proportions between the two according to price and macro considerations. They make a nice pair as TFIF is floating rate and Bips is fixed rate. Together they are similar(ish) to SMIF but I can choose on the relative balance between the sectors.
I do like that Twentyfour are responsive to any questions, they also provide a good regular sector by sector commentary to their funds (in complete contrast to Bips who are rather poor in these areas).
Not in this yet (but I am in the SMIF fund from the same company).
There are 11 funds offered by Twentyfour, but fell across this fund when I saw it near the top end of the FTSE250 for best metrics in that index.
The SMIF fund is a paid-monthly dividends, whereas this is paid quarterly. The yield in this is greater, but am trying to move my entire investing stance to monthly payers - there are a few more monthly's by other companies but depends on which brokers you use who will access these CEF's Income Trusts.
Because as Michael Cain might have not-said :) the reason is: Because not a lot of people know that.
Anyway, interested; but have concerns of lacking diversity if I do go for it.
I believe the next dividend payment is due to go XD circa 18th of this month and paid out on 1st of May. A whopper too - a 5% divi payment in one go of maybe 5p+???
Question - Is that your understanding to? XD this month for circa 5p?
2nd question:
Do other posters have similar holdings from the same company - Twentyfour, besides this fund?
It may be 'Altice's' issues weighing on sentiments re- CLO's at the moment (nearly 40% of the assets are in this class). Evidently most CLO's will have some exposure to Altice although the capital structure of them should absorb this OK (If my understanding of how they work is correct!). There is more on this on their Insights web page.
'The majority of CLOs have some sort of exposure to Altice, and while we think unsecured bonds are at risk the ultimate recovery on senior secured loans should be manageable in our view'
Why, because as you say when interest rates drop, bond funds (or bond fund proxies) will rise, whilst the income from TFIF which is floating rate, will fall. I was rather overweight TFIF so for me it was primarily a matter of rebalancing/diversifying .
Most went in BBGI, but I also topped up BIPS (and added a bit to MYI and HFEL).
I like TFIF and have held it in varying amounts in the past. I have no plans to exit entirely, especially as I can see money supply being tighter than in the past, which will result in higher interest rates.
Monk, Out of interest, what infrastructure and bond funds are you rotating into? Also, why would you rotate out of TFIF to other bond funds, other than to spread risk?
One would have thought that, when interest rates start to fall, bond prices would start to rise i.e. there will be a switch from rising income returns to rising capital returns (as implied by the the MTM yield). Would you disagree?
Everything I have seen, or read, points to default rates being far lower than expected, so I don't think it comes from that perspective.
I think it may be a combination of the generally weak UK markets, plus positioning in the expectation of rate cuts. I rotated some from TFIF to Infrastructure/bonds and I guess others have as well?
I still have a good holding here for the income and don't see rates dropping to the low levels seen previously during QE, but I am not so overweight in it as I was last year.
It will be interesting to see if it spikes up as we get nearer to the divi.
Monk, Any thoughts on the widening discount to NAV? Am slightly surprised that whilst NAV is continuing to trend upwards the discount is rising having previously started to narrow at the end of last year (TFIF was trading on a 0.25% discount as of the end of December but this increased to a 3.35% discount as of the end of February and, as of today, is currently c4.46%).
I see from the latest factsheet that the purchase yield was 11.4% at the end of February, which would suggest that they will be paying a final dividend of c5.5p (to be declared in April).
Bought some more of these yesterday. Hoping the next dividend in April will be better than last years.