TwentyFour Select Monthly Income (SMIF) -ISIN-GGOOBJVDZ946
This investment trust, live traded on the LSE, holds a diversified portfolio of fixed income credit products. Opportunities arise from situations such as small issuance size or legacy issues. Most of the portfolio is invested in B/BB credits (approx. 70%) and the holdings are typically held to maturity. As at the end of December 2017, European and US High Yield Bonds, Bank Fixed Interest Issues and Asset backed securities represented about 89% of the total portfolio. The portfolio is well diversified with 94 positions, and the largest holding is less than 3.04% of the total. The duration of the portfolio is relatively low, and the three-year volatility is below 5%. This volatility is reflected in a share price that has remained within the 84p-105p range since launch, while continuing to pay high annual income, monthly.
- Twenty-Four Asset Management, the parent group is a London based fixed income specialist, established in 2008, with £7.3 billion assets under management and an investment team of 21 professionals.
- Rather uniquely, SMIF pays a MONTHLY Income of 0.5p. In addition, it pays a larger dividend each October to distribute all the financial year’s income. At the current price the annual yield is 6.62% based on the last twelve monthly dividends.
- Another unusual feature of this fund is that there is a quarterly tender process for up to 20% of the share capital at a 2% discount to NAV.This tender process is a robust discount control mechanism because it gives investors comfort that they can exit at close to NAV in a reasonable time frame.
- The trust has tended to trade at a premium to asset value of between 1% and 5% over most of the period since launch in March 2014.
- As at 15th January the trust traded on a 1.95% premium and 6.62% historic 12-month yield.
The fund is recommended as an income play with additional features such as the discount control as well as the potential for capital growth from spread tightening and the pull-to- par elements of the portfolio. Suitable for a more cautious investor looking for a regular income flow.
by Ken Baksh
Ken has over 35 years of investment management experience, working for two major City institutions between 1976 and 2002.
Since then he has been engaged as a self-employed investment consultant. He has worked with investment trusts, unit trusts, pension funds, charities, Life Fund,hedge fund and private clients. Individual asset managed have included direct equities and bonds pooled vehicles currencies, derivatives and commodities.
Projects undertaken in a number of areas including asset allocation, risk control, performance measurement, marketing, individual company research, legacy portfolios and portfolio construction. He has a BSc(Mathematics/Statistics) and is a Fellow Member of the UK Society of Investment Professionals.
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