TwentyFour Income Fund (TFIF)’s portfolio returned 8.37 per cent over the first half of its financial year, following what portfolio manager Aza Teeuwen described as a “buoyant first half [which] produced positive investment opportunities across the asset-backed securities (ABS) sector.”

Net assets rose to £826.4m, up from £813.54m at the end of March. 

The FTSE 250-listed investment company invests in less liquid ABS in Western Europe, including collateralised loan obligations (CLOs) and residential mortgage-backed securities (RMBS). 

CLOs performed best in the portfolio over the period, with B and BB CLOs delivering investment returns of 17 per cent and 12 per cent respectively.

NAV per share rose by 1.6 per cent to 110.50p in the first half, up from 108.97p at the 31 March year end.

NAV return per share was 7.05 per cent across the period, compared to 18.10 per cent at 31 March 2024 and dividend payments were 4p for the first half, in line with the 8p per annum target.

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TFIF pays out all its income in dividends every year, with a target return of between six to nine per cent every year since 2017. These are paid after the first three quarters at 2p, with a balancing payment in the fourth quarter.

It was also trading at an average discount over the period of 4.27 per cent, significantly closer to NAV than the wider investment company universe.

“The discount is not that wide, compared to others, but it will come in,” said TwentyFour chair Bronwyn Curtis OBE. “So, it’s an attractive time to buy and it’s also a fund where, if people are looking for a steady income, with a bonus at the end, it’s a really nice fund to have.”

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TwentyFour expects a healthy pipeline of ABS issuance for the remainder of the year, following record issuance to date, and sees good value in new BB and B rated CLO investments from top quartile managers.

It continues to favour shorter dated, secured ABS from larger bank lenders and significant risk transfer transactions to maintain flexibility in the portfolio. The main risk to performance continues to be geopolitical risk generating uncertainty in the market.

Looking ahead to the coming year, Teeuwen said: “I think there’s a good chance we will have seen some decent volatility in those 12 months. But all things being equal, I think spreads could be a little bit tighter, because in general we are still a bit wide. At the same time, I still expect to see some corporate bond defaults, so I don’t think we’ll tighten very materially. At the same time, we will have cleared a good level of income. You normally wouldn’t expect to see the portfolio change dramatically over that period; we’re positioned quite well.”

However, he highlighted the ongoing geopolitical insecurity, which he said may be easier to predict once US president-elect Donald Trump has returned to the White House at the beginning of next year.

The fund was recognised at the recent Alternative Credit Awards, where it won the accolade for Fund of the Year (Sub $1bn).

Commenting on the award, Curtis said: “When you look at the fund and the steady returns, as well as the fact that the risk profile is carefully thought about, I think it frankly deserves the recognition. It’s really nice to get it.”

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