TwentyFour Select Monthly Income Fund (SMIF) has released its annual report for the financial year ending 30 September 2022.
- Over the twelve-month period TwentyFour Select Monthly Income reported a NAV total return of -18.94%, below its target return of 8-10%.
- A total dividend of 6.39p was declared over the financial year, meeting the trust’s target of paying a 0.5p dividend each month. SMIF’s dividend fell by 2% from its previous financial year.
- The company’s shares traded at an average premium of 3.4% over the financial year, trading on a premium on all but one day over the period. It traded on a 4.3% premium on the 30 September 2022, and a 1.7% premium on 14 January 2023. The board used the premium as an opportunity to grow the trust, issuing 25.5m new shares, equal to 13.4% of the issuance at the start of the financial year, raising about £22m for the trust.
- A new chair has been announced, with Clair Whittet rotating out and being replaced by Ashley Paxton before the 2023 AGM.
TwentyFour Asset Management, the portfolio manager of TwentyFour Select Monthly Income, has commented:
“After a decade of lower bound or negative rates across much of the developed market the inflationary environment in 2021 and 2022 has forced central banks to normalise interest rates quickly, whilst bringing an end to their quantitative easing programmes and even beginning the process of unwinding the balance sheet. The market adjustment as this has taken place has been severe, and 2022 is likely to see negative returns across every developed fixed income market, led by the more interest rate sensitive sectors like government bonds and investment grade credit.”
“The company has generally performed in line with the various underlying indices, with some underperformance in the emerging markets bucket (which is in any case a small percentage of the fund) offset by strong performance in the European high yield bucket. The composition of the portfolio through the period remained relatively static across sectors, with the biggest change seeing a reduction in the portfolio’s exposure to emerging markets offset by an increase in the portfolio’s exposure to additional Tier 1 bonds.”
“Looking ahead, the team believe the outlook for returns has significantly improved given much higher starting yields and an expectation that government bond volatility will decline as the central banks move closer to peak base rates and inflation pressures start to subside.”