Real Estate Credit Investments Limited

Investment Manager Fact Sheet

Real Estate Credit Investments Limited (the “Company”), a non-cellular company incorporated in Guernsey, is pleased to announce that its Investment Manager’s monthly Fact Sheet as at 30 April 2024 is now available on the Company’s website at:

https://realestatecreditinvestments.com/investors/fact-sheets/#currentPage=1

–	As at 30 April 2024, the Company was invested in a diversified portfolio of 31 investments with a valuation of £309.6m.
–	Cash Balance as at 30 April 2024 was £20.9m. Net effective leverage is 2.2%.
–	RECI continues to use its cash to invest in its existing commitments in highly accretive wider opportunities in senior mortgage lending.
–	As at 30 April 2024, there are 225.2m shares with voting rights in issue, reflecting a NAV per share of 145.9p.
–	A full attribution of changes in the NAV per share is presented in the table:

March NAV	144.5p
Interest income	1.1p
Asset valuations	-0.0p
FX	0.1p
Expenses	-0.2p
Buyback	0.4p
April NAV	145.9p

Passive income text with pin graph chart on business table© Provided by The Motley Fool

How I’d turn £100 a month into a lifetime of passive income
Story by Charlie Keough

Building streams of passive income is a goal for many and making extra funds outside of my main source of income will provide me with an extra layer of financial security.

I don’t need an abundance of money to start doing this. With just £100 a month, here’s what I’d do

Choosing the best

I’d put my money to work in the stock market. Some savings accounts may offer relatively attractive returns at the moment. However, with my money sitting in the bank, I’m missing out on the growth opportunities that the market provides.

More specifically, I think the FTSE 100 is a strong entry point. Many of its constituents are household names whose products are used every day. And as Warren Buffett says, it’s best to invest in companies we understand.

On top of that, the Footsie provides some of the best passive income opportunities. After all, its average dividend yield is around 4%. For comparison, the S&P 500’s is under half of that.

Within the index, I’d look for companies that have a track record of providing stable growth. While past performance is no indication of future returns, this will offer me greater confidence that the companies I invest in will be able to withstand any economic downturn, such as what we are seeing right now.

I must also do my due diligence. For example, I’d be looking at the financial health of companies, more specifically their balance sheets. A firm with high levels of debt may be at risk should it come under financial pressure. What’s more, with interest rates amplified, and predictions the UK base rate won’t decrease to 2%-3% until the tail end of next year, debt will be more expensive to finance.

I’d also look for businesses that have a history of returning value to shareholders, such as Dividend Aristocrats. These are companies that have paid and increased payouts to shareholders for a prolonged period.

How much can I make?

£100 a month is equivalent to £25 a week. And by cutting back my spending, for example, by a coffee every day, I could more than easily afford this.

With an average annual return of 8%, £100 a month after 30 years would equate to a portfolio worth around £125,000. At a 4% dividend rate, I’d be earning just over £9,500 a year in passive income by year 30.

Of course, I’m aware these returns aren’t guaranteed. The stock market is volatile and historical performance may not repeat itself. Nevertheless, nearly 10 grand a year in passive income is not to be sniffed at, even with the impact of inflation. And this additional money could pave the way to a more comfortable retirement.

The post How I’d turn £100 a month into a lifetime of passive income appeared first on The Motley Fool UK.

U decided u wanted to buy a Dividend Hero Trust and u would have bought the yield as without good ole hindsight u wouldn’t know if the price was going to keep falling after u bought.

A belt and braces buy, the yield plus a better than average chance of making a capital gain. Of course it’s doubtful u would have a lump sum of money waiting to be invested, unless u had a stop gain policy.

By sitting u have doubled your money and now have multi options to continue to grow your Snowball. The current yield is 4.85%, so u could take out your stake or sell all. I’m not authorised to give buy or sell advice, so different strokes for different folks.

Let’s assume u invested 10k and simply re-invested the earned dividends, your shares are now worth £23,800.00.

U could re-invest 10k into a near year government gilt, which should provide income and be near the value u paid if/when the next market crash occurs. The other £13,800 could be re-invested in a Trust yielding 9%, there are better yields on offer but a higher yield is accompanied by a higher risk. As this is now all profit u may want to take on more risk, especially if u are still in the early accumulation phase. This would give u a blended yield of 7% and a cash sum to invest if/when Mr. Market gives u the opportunity. The yield on your initial investment is now 16.66%, so your Snowball should start to grow quicker.

Or u could re-invest in 2 new Trusts with a blended yield of 8%, income of £1,904, a yield of 19%, on your initial investment.

Although history doesn’t always repeat, it often rhymes, everything crossed for the next market crash.

The Motley Fool

 by James Beard

I invest in dividend shares because they give me a healthy second income. I use this cash to buy more stocks, compounding any gains.

When I come to retire, the same high-yielding shares should give me some additional income to supplement my pension.

Ground zero

If I started my investing journey again, I’d give myself 30 years to build a portfolio of stocks. Assuming a retirement age of 65, I wouldn’t have to start until my mid-thirties. Beginning earlier would be better but I know this isn’t always possible.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

The most that can be invested in an ISA in any one tax year is £20,000. I’m therefore going to assume that this amount is available to kick-start my portfolio.

Picking winners

There are no hard and fast rules when deciding on the number of Footsie stocks to buy. Initially, I’d divide my lump sum between five.

Generally speaking, the more individual positions that are held the more likely it is that a portfolio will replicate the performance of the index as a whole.

The average yield of the FTSE 100 is expected to be 3.8% in 2024.

If this continued for 30 years — and I reinvested all of the dividends received — my hypothetical £20,000 would turn into £61,228. This ignores any capital growth that I might achieve.

Unfortunately, dividends are never guaranteed. And share prices can move up and down. But history tells me that, over the long term, the stock market should do better than cash savings.

Better than average

Although a yield of 3.8% is attractive, I think I could do better. The average of the top five FTSE 100 shares is currently 9.3%.

One of these is Legal & General (LSE:LGEN).

The financial services provider is hoping to acquire £8bn-£10bn of new pension schemes each year. As well as earning a fee based on the amount transferred, it invests the assets hoping to achieve a return higher than what it needs to pay in pensions.

Encouragingly, the company has increased its dividend in 13 of the past 14 years.

Source: Legal & General annual reports Provided by The Motley Fool

Also, analysts are expecting earnings per share of £24.66 in 2024. This implies a forward price-to-earnings ratio of 10, which is below the Footsie average.

However, despite these risks, I recently added the stock to my portfolio. I think it has the balance sheet strength and growth opportunities that should enable it to continue paying a generous dividend.

If I could achieve a 9.3% return on an initial lump sum of £20,000, after 30 years I’d have £288,161.

I could then draw down some of this each year. Alternatively, I could take the annual income of £26,799 and spend it on things other than shares.

A £1,000 passive income just from buying shares? Yes, it’s possible.

Story by Christopher Ruane

Warren Buffett at a Berkshire Hathaway AGM

Capital requirement

First, the need for money. Very few passive income ideas require zero cash at all. But some are more capital-intensive than others.

Imagine I want to make a £1,000 passive income annually and invest in shares with

As an example, if I invested only £5,000 now and compounded the 7% dividends annually, after 16 years I ought to be earning £1,000 each year in passive income.

Finding income shares to buy

What about one of the other challenges? Finding shares that will hopefully not lose value and also generate dividends?

The short answer is, there are no guarantees in the stock market.

Even a great company can run into unforeseeable difficulties. That is why seasoned investors like Buffett spread their portfolios over a range of different shares – and I would do the same, even with a modest amount to invest.

Different passive income ideas have their own pros and cons. Take buying shares as an example. It is an idea that gets bandied around a fair bit – and some people have built huge passive incomes doing it. Indeed, some leading billionaires generate a sizeable part of their income from shares.

But share prices can fall, meaning that overall one makes a loss even after considering the dividend income. Dividends are never guaranteed. On top of that, it takes money to make money – buying shares is not free, after all.

Here are some of the things I like and dislike about owning shares as a way to earn passive income.

Capital requirement
First, the need for money. Very few passive income ideas require zero cash at all. But some are more capital-intensive than others.
Imagine I want to make a £1,000 passive income annually and invest in shares with an average dividend yield of 7%. To hit my target, I would need to invest around £14,300.

I could drip feed money into a share-dealing account or Stocks and Shares ISA over time. So while I may not hit my £1,000 passive income target in year one, I could achieve it down the line.

Another option is I could start to earn dividends on my dividends. This is known as compounding and is a well-known approach of billionaire investors such as Warren Buffett. He compares it to pushing a snowball downhill so the snow starts to pick up snow, increasing the size.

As an example, if I invested only £5,000 now and compounded the 7% dividends annually, after 16 years I ought to be earning £1,000 each year in passive income.

Finding income shares to buy
What about one of the other challenges? Finding shares that will hopefully not lose value and also generate dividends?

The short answer is, there are no guarantees in the stock market.

Even a great company can run into unforeseeable difficulties. That is why seasoned investors like Buffett spread their portfolios over a range of different shares – and I would do the same, even with a modest amount to invest.

The number of investment companies trading at a 52-week high has fallen for the fifth week in a row. With just eight funds making it into the latest Discount Watch.

ByFrank Buhagiar•07 May

We estimate there to be eight investment companies which saw their discounts hit 52-week highs over the course of the week ended Friday 03 May 2024 – two less than the previous week’s 10.

The number of 52-week high discounters has now fallen for five weeks in a row. Just eight funds make it on to the list this time round compared to 10 previously.

What’s behind the ever-diminishing list of names, particularly as a high degree of uncertainty remains over the timing and depth of any interest rate cuts this year? Could it be that investment company discounts are seasonal? 

For the last two years, the weekly number of 52-week high discounters has followed a very similar pattern. Only two years of data, true, but could there be something that causes a significant drop off in year-high discounters around end of March/beginning of April? Well, there just might be.

The top-five discounters

FundDiscountSectorGround Rents Inc GRIO-70.08%Property

Gore Street Energy Storage GSF-45.70%Renewables

VPC Specialty Lending Inv VSL-39.62%Debt

New Star Investment NSI-39.20%Flexible

Downing Renewables & Infrastructure DORE-38.09%Renewables

The full list

FundDiscountSectorVPC Specialty Lending Inv VSL-39.62%Debt

Impax Environmental IEM-12.32%Environmental

Jupiter Green JGC-32.83%Environmental

New Star Investment NSI-39.20%Flexible

Schroder British Opps SBO-35.78%Growth Capital

Ground Rents Inc GRIO-70.08%Property

Gore Street Energy Storage GSF-45.70%Renewables

Downing Renewables & Infrastructure DORE-38.09%Renewables

Weekly Gainers

Hipgnoisis Songs continues to play a merry tune and Gresham House Energy Storage keep the party going. Both find themselves occupying the top spots on Winterflood’s list of monthly movers in the investment company space. Which other funds are performing well and what’s the update on Scottish Mortgage?

ByFrank Buhagiar•07 May

The Top Five
Hipgnosis Songs (SONG) still holding onto top spot on Winterflood’s list of monthly movers in the investment company space. The shares’ +54.3% gain on the month, a little below the previous week’s +67.1%_ but still comfortably ahead of the rest of the pack. Week ended Friday 26 April 2024, Concord Chorus’ announcement that it had upped its cash offer to US$1.25 a share stole the headlines. Just days later on 29 April and Blackstone Europe trumped Chorus with a US$1.3 (104p) bid of its own. What will Concord do next?

Gresham House Energy Storage (GRID) held onto second place as the shares extended their monthly gain to +34.7% compared to +22.5% previously. Shares still benefiting from a flurry of positive updates, including one on 24 April which highlighted a meaningful improvement in revenues. GRID clearly on a run in terms of press releases – the full-year results were subsequently put out on 29 April. Be interesting to see if the company has another update up its sleeve for the week ahead.

Seraphim Space (SSIT) jumps one place to third and at the same time increases its monthly gain to +24.2% from +16.3%. The space investor followed up its well-received sale of early-stage portfolio companies announcement on 22 April 2024 with its regular monthly newsletter. Enough in there to keep the momentum going it seems.

Regional REIT (RGL) still in the top five but drops from third to fourth and that’s despite increasing its gain on the month to +24.2% from +20.5%. Last week, Weekly Gainers highlighted how RGL was in need of a positive trading update of its own to stay in Winterflood’s top five. Lo and behold, the office landlord announced a positive letting update on 1 May.

Schiehallion (MNTN) completes the top five with a +19.1% monthly gain. The growth capital investor has been something of a regular on the Winterflood list this year. That’s largely down to its ongoing share buyback programme. Right on cue, the fund announced another share repurchase on 30 April.

Scottish Mortgage
Scottish Mortgage’s (SMT) share price made up lost ground over the course of the week ended Friday 03 May 2024 – shares finished the week up +0.5% on the month, having been down -5.7% previously. NAV followed suit – up +0.3% compared to -3.8%. As did the wider global investment trust sector which ended the week up +1.1%, seven days earlier it had been off -1.4%. The combination of the Nasdaq rising during the week and SMT’s ongoing share buyback programme, enough to push the shares into positive territory for the month.

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

Which fund would have turned a £1,000 investment made on 31 January 2019 into £1,698 today? And which fund has either met or beaten its annual target return of 8-10% for 10 years in a row?

By
Frank Buhagiar

Doceo

3i Infrastructure (3IN) hits the target again
3IN clocked up an +11.4% NAV total return for the year which, according to Chair Richard Laing, means the infrastructure investor has now either met or beaten its annual target return of 8-10% for 10 years in a row. Laing describes the year as “another year of outperformance from our unique portfolio.” What’s unique is the fund’s underlying businesses being aligned with long-term megatrends. The full-year report lists a number of these including renewable energy, electrification, automation/digital operations, demand for healthcare, smart cities and urbanisation. And because of the exposure to these megatrends, the portfolio managers believe the fund can continue to deliver across the economic cycle. A fund for all seasons.

Investec: “The portfolio continues to perform strongly and we think the company remains well-placed to provide investors with a respectable yield and attractive total returns. We reiterate our Buy recommendation.”

Liberum: “We continue to view 3IN as one of the best-placed funds to deliver attractive NAV returns in a capital-constrained environment due to its active management of Core-plus companies”.

JPMorgan: “A headline discount of around 8%, which although narrow relative to peers is justified in our view by higher net returns given active management, relatively low financing costs, a materially higher discount rate than most peers and a proven ability to capture uplifts on exit. We thus see no reason to change our Overweight recommendation.”

Jefferies: “The portfolio’s underlying earnings growth and the potential for realisations continue to position it well going forward.”

Numis: “We would add to holdings for exposure to a well themed portfolio and strong management team.”

ICG Enterprise Trust (ICGT) refreshes the parts other funds can’t reach
ICGT reported a +2.1% NAV per share total return for the year. According to Chair Jane Tufnell, that brings the annualised NAV per share total return generated over the last five years to +14.6% and an annualised Share Price Total Return of +11.2%. In hard cash terms, £1,000 invested in the private equity investor on 31 January 2019 would now be worth around £1,698 (assuming reinvestment of dividends). Portfolio manager Oliver Gardey, puts the positive performance down to the fund’s focus on investing in companies with defensive growth qualities.

Looking ahead, the Tufnell believes ICGT is more relevant than ever. That’s because private ownership of companies is expected to keep on growing in the years ahead, which is handy as ICGT’s purpose is “to make the private available to the public”. As Tufnell writes, “we enable you to invest in parts of the economy that you cannot directly access through public markets.” Anyone else reminded of that famous 20th century advertising campaign for a Dutch beer beginning with the letter H?

Numis :“We believe ICG Enterprise’s NAV is a good result in a difficult market backdrop”.

Jefferies: “The introduction of a supplemental share buyback programme highlights the current wide discount in absolute terms and versus peers.”

JPMorgan: “A key part of private equity investment company disclosure is measures of average EBITDA growth, valuations and debt levels. ICGT has listened to market feedback and increased the size of the sample of companies it covers such that it now represents circa two-thirds of the total up from circa one-third previously. In our view this makes the numbers more representative and is a very welcome change. We are Overweight.”

International Biotechnology’s (IBT) ‘quoteds’ steal the show
IBT comfortably outperformed over the latest half year courtesy of an +11.2% NAV total return per share – the Reference Index could ‘only’ manage an +8.2% gain. The star of the show was the fund’s quoted portfolio which generated a +13.1% NAV per share total return – the unquoteds put in a more in line +7.9%. A thumbs up then for the investment strategy which looks to identify companies with innovative technologies, robust intellectual property and strong growth potential.

And the portfolio managers think the combination of reasonable valuations, the increasing pace of innovation, the improved competitiveness of companies and the relatively high number of new drugs being approved all bode well for biotech in 2024. A case of more of the same then?

Numis: “The long-term track record remains strong, with the fund outperforming the index over five and ten years and we believe that the fund, through its risk-aware approach, is well placed to continue this outperformance over the long term. IBT’s shares currently trade on a c.10% discount to NAV, which we believe offers an attractive entry point.”

3i Group’s (III) positive Action
III’s total return for the year ended 31 March 2024 came in at +23%. Chief performance driver once again was European discount retailer Action, which posted a +33% gross investment return. In his comment, CEO Simon Burrows, puts the strong performance down to investment decisions taken over a decade ago. One of these was Action in which 3i first invested back in 2011. Today, it owns 54.8% of the fastest growing non-food discount retailer in Europe and our largest portfolio company according to 3i.

Just how fast is Action growing? Net sales were up 28% to €11,324 million while operating EBITDA grew 34% to €1,615 million in 2023. And 3i has no plans to get rid of its stake any time soon. As Burrows writes in his full-year review “We have been clear for some time that we are going to hold Action for the long term, enabling us to benefit from its compounding growth and returns.” Can’t put it any clearer than that.

JPMorgan: “Overall, this is a strong set of numbers, though the premium to NAV has run up strongly ahead of the results to ~38% (LT average 15%), and we would not be surprised to see this contract at some point. But we have high conviction that the RoE (Return on Equity) over next two years will comfortably exceed 20% and, thus, prospective total returns still remain attractive. We remain Overweight.”

Liberum: “Overall, this is a mixed set of results, in our view, with Action’s performance holding up very well given the circumstances, but the company generally experiencing a sharper slowdown in growth and profits than expected. We wouldn’t be surprised to see some profit taking in the shares, any weakness in the share price should be short-lived and considered an opportunity to add stocks to a portfolio”.

North Atlantic Smaller Companies (NAS) keeps its powder dry
NAS posted a +3% NAV per share return for the full year, some way off the S&P’s +15.2% (in sterling terms), but comfortably ahead of the Russell 2000’s -2.3% (in sterling terms). One reason for the relatively stable performance is what Chairman Sir Charles Wake describes as NAS’ “conservative investment strategy” – as at end of January the fund held £70 million, or more than 10% of the market cap, in cash and US treasury bills. That means the investment managers have plenty of funds to hand to take advantage of any attractive opportunities they come across.

Winterflood: “Share price -5.4%, as discount widened to 28.0% from 23.5%. Repurchased 140k shares. Portfolio comprised 8.3% US exposure, 81.8% UK exposure and 9.9% US Treasuries.”

For any new readers the rules are. There only 2.

Buy Investment Trusts that pay a dividend to buy more Investment Trusts that pay a dividend.

If any Trust that drastically alters its dividend policy, it must be sold, even at a loss.

The current buying yield is 7% minimum, as dividends compounded over ten years doubles your income thru thick and thin and there will be plenty of thin.