Month: May 2024 (Page 19 of 22)

Berkshire Hathaway’s first quarter profits plummeted along with the paper value of its investments, but the company said Saturday that most of the businesses it owns outright performed well.

The company reported reported a $12.7 billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of last year’s $35.5 billion, or $24,377 per A share.

The figures were heavily influenced by a large drop in the paper value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating earnings that exclude the investment figures. Operating earnings jumped 39% to $11.222 billion from last year’s $8.065 billion as its insurance companies showed strong results.

££££££££££££££££££

As a comparison, the current portfolio dividend operating earnings for the last tax year were

£11,072.00

Income of 11% outperforming an annuity and u keep all your capital. If u can compound at 7%, u can double your income in ten years.

Temple Bar’s tips for value investors

Looking for investment tips from the professionals? Well seek no further. Redwheel, Temple Bar’s investment manager, provides a list of dos and don’ts for value investors in the top-performing trust’s latest Annual Report.

ByFrank Buhagiar•10 Apr, 2024

Wouldn’t it be handy to get an investing tip or two from the professionals, those in the know? But not just any professionals, professionals with a track record of outperforming? Step up Redwheel, the investment manager at value investor Temple Bar (TMPL). For in the trust’s latest Annual Report, which was released on 3 April 2024, the investment manager has kindly set out some of the key factors it considers when seeking to uncover the most compelling value opportunities. In other words, a list of dos and don’ts for value investors.

Investment managers dishing out investing tips? Now that’s a rare thing. One deserving of a mention in despatches here. But first, a look at Redwheel’s track record at TMPL to see why it might just be worth paying attention to what the investment managers have to say.

Three years and counting
It’s been over three years now since Redwheel was awarded the mandate to manage the 98-year-old trust – launch date 24 June 1926. Three years, a decent amount of time for managers to get their collective feet under the table. The numbers suggest they have done just that.

According to TMPL Chairman Richard Wyatt’s latest full-year statement: “Since Redwheel took over the management of the Trust at the end of October 2020, the Net Asset Value total return to the end of 2023 has been 86.7% compared with 50.0% for the Benchmark”. As the Chairman says, this represents “a significant outperformance.” What’s more, in each of the discrete calendar years that Redwheel has been at the helm, TMPL has fared better than the wider UK equity income sector:

2023 2022 2021

TMPL share price +12.5% +3.6% +20.0%
TMPL NAV +12.3% +0.9% +24.6%
UK Equity Inc sector +2.9% -4.3% +17.8%

As for how TMPL’s latest full-year results covering the 12-month period ended 31 December 2023 compare to the benchmark, Wyatt adds: “I am pleased to report that the Trust’s Net Asset Value total return with debt at fair value was +12.3%, outperforming the total return on the FTSE All-Share Index of +7.9%. The share price total return was slightly better at +12.5%.”

Point made. Redwheel’s track record since they took over the management of the fund stacks up.

In terms of how Redwheel has generated the above returns, speaking to doceoTV, investment manager Nick Purves had this to say: “Our objective is to take advantage of what we see as the very significant undervaluation in UK equities and also in value stocks to the long-term benefit of the trust’s shareholders. We’re value investors so we look to invest in companies which, for one reason or another, are being undervalued. We’re looking to take advantage of that short-term undervaluation.”

Looking for undervalued companies to invest in is easier said than done. After all, there is no shortage of stocks that are cheap for a reason. Markets are littered with these so-called value traps and so avoiding them is key for the value investor. According to TMPL’s Annual Report: “Some value strategies simply apply mechanistic measures to identify undervalued stocks but this can lead to investing in businesses that are in structural decline; they may be cheap but their potential to recover is limited”.

By contrast, Redwheel’s “‘intrinsic value’ approach aims to identify undervalued, yet good, quality companies with strong cash flows and robust balance sheets. The portfolio management team put a strong emphasis on financial strength because it gives them the confidence that a company can survive through a prolonged period of lower profitability caused by company-specific issues, or an unexpected downturn in the economy.” As the numbers above demonstrate, it’s an approach that works. Helpfully, Redwheel goes on to provide a few pointers in TMPL’s latest Annual Report.

Redwheel’s tips for value investors
Consider probabilities and payoffs
No matter the research, there are always surprises, positive and negative. Think best and worst-case scenarios. If we think a share price could go to zero in one scenario, but has 400% upside in another, there is probably a case for investing.

Enhance, don’t drift
Discipline is key to value investing. Stick to your philosophy, you’re here for the long run. Always look to improve and adapt as things change.

Simple but not easy
Buying shares for less than their worth then selling when the value has been realised is easy to understand. But most don’t invest this way due to a lack of ‘sticking with it’. Value investing is tricky – we are hard-wired to conform – but can be rewarding.

Cycles, cycles, cycles
Profits and share prices are impacted by cycles such as credit, commodity and business. An investor’s overreaction can throw up opportunities. An advantage lies in knowing which cycles impact an investment and where we are in that cycle.

Be contrarian but not mindless contrarian
Investors love to buy what everyone else hates. But having respect for what the market is saying is key. Eagerly buying shares being sold in companies with too much debt, or declining profits, can prove costly and mindlessly contrarian.

Don’t buy rubbish
Recently the market has become fixated with quality and growth. Quality and growth are intrinsic to a business’ value. We’ve had success when high quality businesses have been questioned by the market, resulting in low value entry.

Bargains are rare, make the most of them
It’s unlikely that you’re going to buy a business trading at half its intrinsic value. However, a company or an industry will suffer a drawdown at some stage, which may present an opportunity to buy at a good value.

Adopt an absolute return mindset
Value investing is a risk averse strategy born out of a reaction to the Great Depression. By buying a dollar of value for 50 cents, you build in a ‘margin of safety’ in case the economy and/or the stock market suffer. Value investors see risk as the risk of permanent capital impairment, so, invest with this at top of mind.

Be patient, be long term
A struggling, out-of- favour business is unlikely to turn around the day after you invest. It’s more likely that things continue to get worse, so we try to be patient, allowing for profitability to improve and for the market to recognise it. Our typical holding period is at least five years.

There is no single correct method
Value investing relies on estimating the intrinsic worth of a business. Our experience tells us to be flexible, by adjusting earnings for cyclicality, and to recognise the positive (hidden value), and the negative (e.g. pension fund deficit), on a balance sheet.

So, there you have it, Redwheel’s list of dos and don’ts for value investors.

A few highlights
Among Redwheels’ tips to mention. These include:

“Buying shares for less than their worth”

“We’ve had success when high quality businesses have been questioned by the market, resulting in low value entry.”

“a company or an industry will suffer a drawdown at some stage, which may present an opportunity to buy at a good value.”

The above three have been singled out because the shares of one company are currently trading for less than their worth and so potentially offer a low value entry point that may present an opportunity to buy at a good value. The stock in question? None other than TMPL. That’s because, as at close of play on 05 April 2024, the shares were trading at a -9.79% discount to net assets, not far off the 52-week high of -10.37%. The shares are trading for less than their worth – the holy grail for value investors. And remember that TMPL’s portfolio is invested in stocks the investment managers view as being undervalued. The shares therefore offer a double discount of sorts. That begs the question, does Redwheel see value in TMPL shares?

If the amount of share buybacks undertaken by the fund in the last year or so are anything to go by, then the answer is a resounding yes. As Chairman Wyatt reports in his full-year statement: “The Board has continued with its active share buyback policy, purchasing 27,209,505 shares to be held in treasury for a total consideration of £63.5m during the year.” Furthermore, since year end (31 December 2023) “to 2 April 2024, a further 3,771,869 shares have been bought back for treasury, at a cost of £8.9m.” The value investor seeing value in its own fund then.

Perhaps, Redwheel could add another tip to their list: Sometimes you don’t have to look far to find value.

Discount Watch

Yet another drop in the number of investment companies trading at 52-week high discounts – just 10 make it onto the latest Discount Watch List.

By Frank Buhagiar•

We estimate 10 investment companies saw their discounts hit 52-week highs over the course of the week ended Friday 26 April 2024 – five less than the previous week’s 15.

The number of 52-week high discounters has now fallen for four weeks in a row. A major contributor to the latest reduction is the renewable energy infrastructure space. Week ended Friday 19 April, five names from the sector made it onto the list. Seven days on, just two feature – Downing Renewables and Infrastructure (DORE) and Ecofin US Renewables Infrastructure (RNEW).

The reason for renewables renewed lease of life? A generous helping of positive updates have certainly helped – Gresham House Energy Storage (GRID) reported a meaningful improvement in revenues in a 24 April update; Greencoat Renewables (GRP) gave a well-received update of its own on 25 April which included details of a planned share buyback programme; while Octopus Renewables Infrastructure (ORIT) announced a 10-yr Power Purchase Agreement for one of its wind farms.

So, with updates appearing to do the trick, will next week see the two remaining renewables on the list, DORE and RNEW, put out press releases of their own?

The top-five discounters
FUND DISCOUNT SECTOR

Ceiba Investments CBA -71.08% Property
JPEL Private equity JPEL -41.33% Private Equity
Ecofin Renewables Infrastructure RNEW -41.01% Renewables
New Star NSI -39.20% Flexible
VPC Specialty Lending Invest VSL -38.24% Debt

The full list
FUND DISCOUNT SECTOR
VPC Specialty Lending Investments VSL -38.24% Debt
Develop North DVNO -1.55% Debt
Impax Environmental IEM -12.18% Environmental
New Star NSI -39.20% Flexible
JPEL Private equity JPEL -41.33% Private Equity
Dunedin Enterprise DNE -21.69% Private Equity
Ceiba Investments CBA -71.08% Property
Downing Renewables & Infrastructure DORE -37.71% Renewables
Ecofin Renewables Infrastructure RNEW -41.01% Renewables
Fidelity Special Values FSV -10.05% UK All Cos.

The Results Round-Up – The Week’s Investment Trust Results

Which fund has generated five and ten-year NAV total returns of +18.8% and +85.4% respectively, both of which are double those of its benchmark? And which fund’s average holding period for its top-10 stocks is 10 years? Find out in this week’s round-up.

The Results Round-Up – The Week’s Investment Trust Results

By
Frank Buhagiar

Vietnam Enterprise Investments’ (VEIL) three-year track record of outperformance
VEIL’s NAV per share growth couldn’t quite match that of the index over the full year – in sterling terms NAV per share increased +4.1% compared to the VN Index’s +5.3%. Tables turned over a 3-year period though with VEIL outperforming the index by +2.6%. The biggest detractors to relative performance over the year just gone were retail, real estate and construction sectors.

The Portfolio Manager’s full-year Report lists a number of reasons why investors can look forward to the year ahead: inflation at manageable levels of around 3.3%; interest rates on their way down; and a government focused on economic growth. What’s more the Portfolio Manager has pencilled in mid-teens earnings growth for 2024 which equates to a price to forward earnings ratio of 9.6x. All of which points to a very attractive growth and value profile – and hopefully a positive year ahead.

Numis: “We remain positive on the outlook for Vietnam, which we believe is a beneficiary of diversification away from China.”

Schroder Income Growth’s (SCF) 28 consecutive years of dividend growth
SCF posted an NAV per share total return of +1.9% for the half year, a little off the FTSE All Share’s +3.9%. The Half-year Report puts the underperformance down to stock selection, particularly within the consumer discretionary, industrials and basic materials sectors. The good news is that the second half has got off to a decent start – NAV Total Return stands at +7.6% for the period 29 February 2024 to 24 April 2024, comfortably ahead of the All Share’s +5.9%.

Chairman, Ewen Cameron Watt, points out that since the current investment management team were appointed in July 2011, the fund has outperformed the FTSE All-Share Index by 0.8% per annum on a cumulative basis. And the dividend has continued to grow too – the payout has now been increased for 28 years in a row. That long-term track record is key as, according to Watt, over the long-term returns are less likely to be derailed by any unexpected nasties.

Winterflood: “Share price TR -0.3% as discount widened from 8.9% to 11.1%; 38k shares repurchased over HY, representing first buyback since 2008.”

Gresham House Energy Storage’s (GRID) good timing
GRID had a tough year. EBITDA down 47% year-over-year to £25.8m due to a weakening revenue environment for the battery sector; NAV per share off 17% year-over-year to 129.07p thanks in part to those lower revenue forecasts; and then there was the decision to scrap the 2024 dividend.

Wasn’t all bad though. During the year, operational capacity increased by a quarter to 690MW/788MWh. And since year end, capacity has grown to 740MW, putting the fund on course to hit its 1GW operational capacity target in 2024. Good timing it seems as, according to the Full-year Report, the challenging trading environment has eased in recent weeks as market fundamentals have improved.

Liberum: “We note that GRID is continuing to progress a disposal of a subset of the portfolio and it is hopeful that something may be announced in this regard in the coming month or two. This could act as a helpful proof point in terms of valuation and we note that there is sufficient funding for the planned roll-out without any disposals.”

Ecofin US Renewables Infrastructure’s (RNEW) final Finals?
RNEW’s Finals included an update on the ongoing strategic review, perhaps of more interest to shareholders than the latest full-year numbers. The review is ongoing – already knew that. And it’s taking longer than expected – knew that too. The interesting bit is that the review, which involved looking for potential buyers for the fund’s assets, has, according to Chairman, Patrick O’D Bourke, resulted in “specific discussions and negotiations taking place”. And these negotiations are expected to conclude soon. So, watch this space. As for the full-year numbers, NAV per share fell 9.7%.

Numis: homes in on “comments that potential buyers would take account of RNEW’s discount to NAV, when arriving at their valuation of the portfolio as a whole.”

abrdn Property Income’s (API) full house
API might have reported a -3% NAV total return for the year, but the real estate investment portfolio still managed a +0.7% return, comfortably ahead of the MSCI Quarterly Property Index’s -1.5%. This means API’s portfolio has beaten the Index over 1, 3, 5 and 10-year timeframes – a full house! Despite the outperformance, an Extraordinary General Meeting (EGM) is to be held in May at which shareholders will be asked to approve plans to wind-down the company. Why? As explained in Chairman, James Clifton-Brown’s full-year statement, this is down to concerns over the size of the fund, liquidity in the shares, the discount at which the share price trades to net assets and the lack of dividend cover.

Numis: “The manager comments that if the managed wind down is approved by shareholders, a sales process ‘is expected to take approximately 24 months within a range of 18-30 months from the date of implementation, although this is very dependent on a reasonable market existing for all the Company’s properties.’”

Digital 9 Infrastructure’s (DGI9) long good-bye
DGI9’s latest set of full-year numbers, which included a 28% decline in NAV to £686.3 million, are probably not as important as they may have been a few months ago. That’s because post-period end, 99.9% of shareholders who attended the General Meeting in March voted to adopt a new Investment Objective and Policy – an orderly managed wind-down. In line with this, sale preparations for the fund’s remaining five wholly-owned assets are being progressed. But DGI9 is unlikely to be disappearing anytime soon. According to Chair, Charlotte Valeur, selling the remaining portfolio and winding down the company is expected to take a number of years.

JPMorgan: “DGI9 has a concentrated portfolio and there are significant risks in executing its managed wind down. But on balance we continue to think there is now likely to be materially more upside than downside. We remain Overweight.”

Jefferies: “A reduction in the audited NAV further erodes confidence in the portfolio valuations and so is likely to limit confidence in the wind-down process for the time being. More positively, the balance sheet position will be much more simplified following the impending RCF repayment, albeit with further progress contingent on executing the Aqua Comms sale.”

Pacific Assets (PAC), top of the class
PAC may well have reported a -1.3% NAV total return for the year, but this was still the best among its four peers and an exchange-traded fund. It was also considerably better than the -10.5% fall in the MSCI AC Asia ex Japan Index. In terms of performance drivers, Chair Andrew Impey cited the fund’s Indian exposure as being particularly helpful – seven of the portfolio’s top-10 positive contributors during the year were Indian companies.

As for the outlook, Impey said it’s nigh on impossible to predict what’s around the corner for the Asia Pacific region in the short term, but long-term growth drivers such as a growing middle class, investment in infrastructure and technological change remain in place. Helpfully, the fund’s Portfolio Manager invests for the long term. According to the Portfolio Manager’s Report, the average holding period for the top-10 stocks is 10 years.

Winterflood: “India exposure level is determined by bottom-up stock selection, not a ‘macro overlay’, thematic view or political assessment. 75% of top 100 India stocks considered uninvestable for quality or sustainability reasons. China & Hong Kong exposure (12% of NAV) detracted. Approximately 20 Chinese companies considered investable. Indiscriminate sell-off has generated opportunities for stock-picking, and the managers expect China weighting to increase.”

Invesco Perpetual UK Smaller Companies (IPU) to be continued?
IPU posted full-year NAV and share price total returns of –4.1% and –1.8% respectively – a respectable outcome considering the benchmark returned –3.3%. The long-term performance is more than respectable with the fund outperforming the Deutsche Numis Smaller Companies + AIM – Investment Companies Index over five and 10 years – the five-year cumulative NAV total return stands at +18.8%, double the benchmark’s +9.8%; similarly, over 10 years, the NAV total return is +85.4%, more than double the benchmark’s +40.4%. With numbers like these it’s no wonder Chair, Bridget Guerin, and the Board are hoping shareholders vote for the fund’s continuation at the June 2024 AGM “to allow the Company the opportunity to continue to grow over a longer market cycle”.

JPMorgan: “if shareholders do want a return of capital they have the opportunity to vote collectively against continuation, though we would expect the company to continue. Overall, we see no reason to change our Neutral recommendation.”

The Tip Sheet

The Times thinks Schiehallion offers something different for sophisticated investors, while This is Money runs the rule over JPMorgan American.

The Tip Sheet

By Frank Buhagiar

Tempus – Schiehallion offers something different, if you dare…
To summarise the investment case presented in the above tip from The Times’ Tempus Column, it’s helpful to flip the article on its head and start at the end: “Advice Buy. Why? High risk and only for sophisticated investors, but provides meaningful diversification from traditional investments.” High risk? As Schiehallion (MNTN) itself says, it’s one for professional and sophisticated retail investors. Why? Because MNTN looks to invest in late-stage private companies that have a good chance of going public.

Trouble is, that private company focus can come with a high degree of volatility. Just look at the fund’s performance over the past two years. During this period, MNTN shares fell almost 70% from their peak before rebounding 39% in dollar terms in March alone. Not for those with a nervous disposition then, but as Tempus writes: “There is much to like in its underlying portfolio.”

The portfolio companies are growing – the latest full-year results highlighted how the top 20 companies posted overall revenue growth of 40% and 40%+ gross margins. The top-five holdings (SpaceX, Wise, Affirm, ByteDance and Bending Spoons) are all cash generative – three are profitable. And the average cash runway (how much time a loss-making company has before it runs out of cash) is over five years – 90% of the portfolio has over 12 months’ cash runway.

As for the “meaningful diversification” the fund provides, it’s worth going back to the opening lines of Tempus’ tip: “Companies are staying private for longer. In 1980, the median age of a business at flotation was six years. Today it is ten. By the time these businesses hit the public markets, investors have missed out on some of their best growth spurts.” There you have it, MNTN allows sophisticated investors to participate in pre-IPO growth spurts.

This is Money: JPMORGAN AMERICAN: Thinking big… £1.8bn trust built around America’s mega stocks
JPMorgan American’s (JAM) turn to get the once over from This is Money’s Jeff Prestridge. Understandable after the fund clocked up a +36% return over the past year. While much of the strong performance is down to JAM’s exposure to 40 mega-cap growth stocks and the buzz surrounding AI, the fund is no one-trick pony. For as well as holding its fair share of growth names such as tech giants Microsoft and Nvidia, JAM also invests in stocks that represent outstanding long-term value for money – names here include oil and gas company EOG Resources and healthcare giant Johnson & Johnson.

Growth and value stocks held side by side – JAM is style-agnostic. The article goes on to quote Felise Agranoff, one of four managers, who describes JAM as “a blend of our very best investment ideas. We’re not wedded to any one investment style which means we can find opportunities right across the market.’” Speaking of the fund managers, one of the team Jonathan Simon is due to retire next year but, according to the article, “the impact on shareholders will be minimal.” Not because Simon won’t be missed but, as Agranoff says, “We have a deep investment bench here”.

If u had invested 10k from the chart in MRCH and re-invested the dividends u would now have 20k.
U could decide to sell the whole position, u may be premature, it’s all conjuncture because I doubt if many bought from the chart.
U could re-invest in NESF and SMIF and earn a dividend yield of 10%
10k x 10% 1k x 2 = 2k
Initial sum invested 10k a yield of 20%. If u do nothing u could receive the initial sum back in another 5 years and your Snowball is really starting to grow. If u re-invest u would have 30k invested in the market and who really cares or knows what it will be worth in 5 years time. U just need to be ready when Mr. Market gives u the chance, u will be concerned that the price will keep falling after u buy but if u are content with the yield it shouldn’t matter.
But as always best to DYOR.
Stick to your plan, until it sticks to u.

Motley Fool

TWENTYFOUR SELECT MONTHLY INCOME FUND LIMITED

Annual Report and Audited Financial Statements

For the year ended 30 September 2023

The Directors of TwentyFour Select Monthly Income Fund Limited (the “Company”) announce the results for the year ended 30 September 2023.

FINANCIAL AND OPERATIONAL HIGHLIGHTS

• NAV per share of 75.44 pence (FYE 30/09/22: 69.99 pence)
• Total Net Assets of £181.69 million (FYE 30/09/22: £151.33 million)
• Dividends declared for the year of 7.37 pence per share (FYE 30/09/22: 6.39 pence per share)
• Total Return of 17.54% (FYE 30/09/22: -18.94%)

Eoin Walsh, Partner & Portfolio Manager at TwentyFour Asset Management, said: “The rising rate environment resulting from global inflation has enabled us to position the TwentyFour Select Monthly Income Fund Limited positively over the period. The strong NAV performance coupled with a focus on the credit quality of the portfolio positions has left the Company well placed for the next stage of the cycle.”

Ashley Paxton, Chairman of TwentyFour Select Monthly Income Fund, said: “We are very pleased to present the audited financial statements for the Company, which demonstrate how the TwentyFour Select Monthly Income Fund Limited has delivered a Total Return of 17.54%, including dividends declared of 7.37 pence per share. We are also pleased to reflect on the share activity for the period, having traded at or around NAV (within a c4.5% tolerance above and below NAV) throughout the year to 30 September 2023, at a time where the majority of the investment company market saw significant discounts.”

SUMMARY INFORMATION

The Company

TwentyFour Select Monthly Income Fund Limited (the “Company”) was incorporated with limited liability in Guernsey, as a closed-ended investment company on 12 February 2014. The Company’s Shares were listed with a Premium Listing on the Official List of the UK Listing Authority and admitted to trading on the Main Market of the London Stock Exchange (“LSE”) on 10 March 2014.

Investment Objective and Investment Policy

The Company’s investment objective is to generate attractive risk adjusted returns, principally through income distributions.

The Company’s investment policy is to invest in a diversified portfolio of credit securities.

The portfolio can be comprised of any category of credit security, including, without prejudice to the generality of the foregoing, bank capital, corporate bonds, high yield bonds, leveraged loans, payment-in-kind notes and asset-backed securities and can include securities of a less liquid nature. The portfolio is dynamically managed by TwentyFour Asset Management LLP (“TwentyFour” or the “Portfolio Manager”) and, in particular, is not subject to any geographical restrictions.

The Company maintains a portfolio diversified by issuer and comprises at least 50 credit securities. No more than 5% of the portfolio value will be invested in any single credit security or issuer of credit securities, tested at the time of making or adding to an investment in the relevant credit security. The Company may hold up to 10% in cash but works on the basis of an operational limit of 5% and any uninvested cash, surplus capital or assets may be invested on a temporary basis in:

• cash or cash equivalents, money market instruments, bonds, commercial paper or other debt obligations with banks or other counterparties having a “single A” or higher credit rating as determined by any internationally recognised rating agency which may or may not be registered in the EU; and

• any “government and public securities” as defined for the purposes of the Financial Conduct Authority (the “FCA”) Rules.

Efficient portfolio management techniques are employed by the Company, and may include currency and interest rate hedging and the use of other derivatives to manage key risks such as interest rate sensitivity and to mitigate market volatility. The Company’s currency hedging policy will only be used for efficient portfolio management.

The Company does not employ gearing or derivatives for investment purposes. The Company may use borrowing for short-term liquidity purposes, which could be achieved through arranging a loan facility or other types of collateralised borrowing instruments including repurchase transactions and stock lending. The Articles restrict the borrowings of the Company to 10% of the Company’s Net Asset Value (“NAV”) at the time of drawdown. No arrangements for borrowing are currently in place.

At launch, the Company had a target net total return on the original issue price of between 8% and 10% per annum. This comprised a target dividend payment of 6p per share per annum and a target capital return of 2p-4p, both based on the original issue amount of 100p. Whilst there is no guarantee that this can or will be achieved, the 6p per share Dividend Target has consistently been met.

In accordance with the Listing Rules, the Company can only make a material change to its investment policy with the approval of its Shareholders by Ordinary Resolution.

CHAIRMAN’S STATEMENT

For the year ended 30 September 2023

As Chairman to the TwentyFour Select Monthly Income Fund Limited, I am delighted to present my first report on the Company’s progress for the year ended 30 September 2023.

Market Overview

Central bank activity, higher inflation data, continuing low employment rates and the upward pressure on wages have been the biggest driver for much of the year as central banks implemented more rate hikes and market participants watched closely for signs that inflation was moving back towards target. Towards the end of the year to 30 September 2023, central banks seemed to be approaching or were already at terminal rates for the cycle, allowing existing rate increases to feed through and to continue to bring inflation closer to target. Labour markets and other economic data remained resilient, leading to some market participants to call for a soft-landing. However, in our view, with central banks maintaining their “higher for longer” messaging, there is an increased likelihood of more cracks appearing in the global economic picture.

Towards the end of the year, volatility in the rates market was driven by strong economic data and concerns over budget deficits together with increased supply and term premiums. This volatility led to a modest softening in credit spreads towards the end of the period.

Generally, earnings remained resilient, particularly in the European banking sector where banks maintained strong capital levels and low non-performing loans (“NPLs”) and called and issued Additional Tier-one bonds (“AT1s”) as expected, post the collapse of Credit Suisse.

With the bouts of volatility over the period, there is a lot of value in the portfolio, with many of the Portfolio Manager’s favourite names and bonds trading at very attractive levels.

The Portfolio Manager also sought to increase the credit quality of the portfolio by continuing to conduct relative value switches, which served to improve the yield and extend duration to lock in the available attractive yield levels.

Outlook

The Portfolio Manager’s base case is for a “soft-ish” landing whereby it expects a short and shallow recession and for the unemployment rate and default rates to increase moderately. We expect to see a deterioration of economic fundamentals as the lag effects of the many interest rate increases feed through economies, leading to a mild recession as the economy is supported by strong consumers, corporates and banking sector. This should give central banks the ability to cut interest rates later in 2024.

The Board believes there is a lot of value in the portfolio and the very attractive yields offer good protection against future volatility and the Portfolio Manager is actively adjusting the portfolio to find better opportunities for value, in order to optimise the Company’s performance.

££££££££££££

The dividend is fairly secure, they occasionally pay an increased dividend in April which was already declared before the Trust was bought for the portfolio.

Pays a monthly dividend, which can be re-invested but as always best to DYOR.