Firering Strategic Minerals: From explorer to producer. Watch the video here.
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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Sorry to ask a noddy question. I was going to buy these with my II account, but when it came to trade it took me to a question form asking if I was experienced, and warned that I could los it all too quickly to react to etc etc.
Filled that in and then after accepting the quote it too me to another warning page. I stopped there.
I’ve been trading shares for 30+ years but this was intimidating and seriously got me worried about what sort of fund this is.
Is there a real risk to this one as opposed to every other stock?
Unless Monkswood would care to contradict me, I would say that there is certainly a higher risk than some stocks because of the nature of the securities TFIF owns. But the management team has a very good track record and, to date, none of the securities its owned have ever left them out of the money i.e. insufficient collateral to repay the debt at maturity.
It should be recognised from the outset that TFIF does not just deal in bonds issued by European governments which, under normal conditions, are generally considered 100% secure from default. It also holds residential mortgage backed securities (RMBS), asset backed securities (ABS, income-generating debts such as credit card debts, home equity loans, student loans, and car loans) and collateralised loan obligations (CLO). CLO are classed as derivative instruments. As you will appreciate, general economic conditions can have an impact on the assets underlying all of these securities but TFIF tends to manage this risk by trading off investment return against recoverability i.e. by tending to buy higher rated securities/tranches which offer lower returns for greater investment security rather than junk bonds (there's a tiered order in which investors are paid should the underlying assets be insufficient to repay the debt at maturity, e.g. AAA are repaid before AAB etc, and the return on each tier recognises the greater risk of non-payment at maturity). Also, if this is of additional comfort, TFIF limits itself to just the European market (it doesn't own any US or RoW securities).
It sounds as if ii might be classifying TFIF as a complex instrument. The definition of complex instrument appears to vary from one broker to the next; I was asked to renew my complex instrument credentials by AJ Bell recently and decided to ring them (because their definition of a ncomplex instrument was, in my view, a bit "wooly" and could have conceviably included all and any investment trusts) to go through my current shareholdings line by line (including TFIF) and was able to confirm that none of my current investments were flagged as complex instruments by AJ Bell.
Personally, I do not consider TFIF to be a complex instrument because, importantly, unlike (say) unit trusts there should always be a market for its shares (you are not reliant on TFIF being able to sell its underlying investments to be able to sell your shares). Certainly there is, perhaps, a higher risk attached to TFIF's shares in the event that there was a repeat of the 2008 financial crisis and you could make signficant losses if you were forced to sell at the bottom but it has to be recognised that no shares are likley to perform particularly well in a general market meltdown and you are a forced seller. However, due to TFIF's diversified portfolio, the risk to TFIF should one of its investments go pear-shaped ought to be fairly negligible.
Hope that helps. As always, only invest what you can afford to lose.
Thanks TT. That does allay my fears, and you’ve explained it excellently!
I think I will invest, and although it looks fantastic on the site, I will temper myself… limit to what I could lose, though I don’t expect to!
If you don’t mind me asking, what else do you invest in?
Sean, I'm primarily investing for income and these days (capital growth, at least in the short/medium term, is of secondary importance), with mixed results. I'm a contrarian. I believe that the UK market is fundamentally undervalued and that, by the normal rules of arbitrage, at some point investors will be forced (ny logic) to return but for the moment they seem to be firmly wedded to buying an asset for 100p elsewhere even though a comparable asset can be bought here for 80p!
I'm quite heavily invested in the pension/insurance market (about 20% of my portfolio by cost), e.g. AV, LGEN, MNG and PHNX, as I believe that this market will continue to thrive as the UK's population ages. Income has been good thus far but capital returns less so (about breakeven) ;-(
I'm also a bit of sucker for infrastructure and property (again about 20% of my portfolio by cost), e.g. AEWU, BBGI, GCP, GSF, RGL and SAFE. Again income has (generally) been good thus far but capital returns not so (RGL has been particularly badly affected by the rise in interest rates). However, I think these will start to improve if interest rates start to fall as expected in the forthcoming year or so.
The rest of my portfolio is a bit of mixed bag. I do currently hold one equity investment trust (AEI) which I hold for income and a bit more diversification, and am looking at other possibles. AEI has quite a good dividend at present but I'm not sure whether it'll be able to sustain it (I believe so but am not certain) because a few of its investments have cut or stopped their dividends recently. That said, it's NAV has been buoyed of late by a few takeover offers, so it's not all doom and gloom.
I do hold a few outliers that I think could become multibaggers (doesn't everybody) and I rather fancy FTC, SOS and ZTF at present. SOS is, I believe, well managed and a bit of a slow burner but I think it will come good given time. FTC and ZTF are already on the march and I think that both could still double from here over the next 12-18 months.
ZTF might actually do better than that if its new beverage packaging material really starts to gain momentum; look out for some further positive news in its AGM statement next week (it could be the next TetraPak i.e. it could be the next market disruptor). In a nutshell, it's a mono-recyclable material which uses less energy to produce than comparable packaging, offers longer life when opened and is also microwavable. Not only that, existing production facilities, with minor upgrades, can be used to produce the new packaging! This article might better explain: https://www.packworld.com/sustainable-packaging/recycling/article/22910049/disruptive-monomaterial-aseptic-hdpe-carton-tech-takes-aim-at-lpb. Also, ZTF's other businesses are good too.
I would never contradict you Trosky!
I think that was a fair summary of TFIF. It is worth looking at some of Twentyfour's videos about how the investment are structured, there are several layers of financial security built into them that offer some degree of protection in the case of defaults over and above the general diversification of the individual securities within the fund.
Sean, If you have not already done so, then this is worth watching -
https://www.twentyfouram.com/insights/twentyfour-back-to-basics-rmbs
and also
https://www.twentyfouram.com/insights/twentyfour-back-to-basics-clos
Thanks guys, and sorry for the delay in saying so.
I’m going to use the long weekend to look at those funds, TT. I’m happy with what I am doing….i just need the right choice, a pla and an investment structure.