New investment trust targeting upto 10% return by investing in UK mortgages


#1

TwentyFour asset management are seeking up to £200 million from investors following on from several successful new IPOs since the beginning of 2015. T
[See the full post at: New investment trust targeting upto 10% return by investing in UK mortgages]


#2

There has been an incredible amount of new issuance this year, many of which I’ve bought holdings in.

I’d like to know a lot more about this one. Is it the type of mortgage back security that started the worldwide financial crisis we’re still suffering from? If not, how does it differ.

Perhaps you would ask this of the managers @dicemccairn.


#3

Is the return just dividend? What about the share price, won’t that grow too no?

 

I would like to know the answer to the question posed by @casper too because this type of investment can be a little risky, we’ve seen that and I say this despite the claim above which I am sure is true about the United Kingdom mortgage defaults.

 

Look at what we’ve seen in España, Ireland and the United States to see how risky this could be so I would like to know more about how they’re are calculating and assessing the risks.


#4

The yield sounds great but I have so many questions I think I’d like to read an article or a review from you guys on this giving us the lowdown.

 

I’d like to know more about who the managers are for instance, what’s their experience.

 

The charging structure sounds good, it’s not cheap but at least there’s not a performance fee.


#5

Who are these guys? I’ve never heard of Twenty Four.

I’d like to see some sort of track record, like to know whose involved and what they’ve done and I’d like to see them investing in this new launch themselves if I’m going to part with my money.


#6

What, another new investment trust IPO.

They have two other investment trusts @jonno so they have some record though short lived.

Clearly to early to form a view on this on but it’s obviously aiming to meet that need for income that’s omnipresent.

We need to see the prospectus, and then we need someone with the patience and intellect to go through it and understand it. There are a few candidates on here I’m thinking of.

Might even nudge 'em when the time comes :wink:


#7

How would the mortgage products they’re buying perform if interest rates go up? Is that a worry for them?


#8

@jonno, in addition to the existing ITs, TwentyFour AM run four OEICs with the earliest launched in 2009. So there is a certain amount of track record for those interested. Information on all those can be found on their web-site. There is a place-holder for the new IT, but no mention of when a prospectus will be available, which gives the first question:

  1. when will the prospectus be available? In the absence of that it is hard to raise other questions because the answers might be in the prospectus, plus that document might raise other questions. In that light, things that might be of interest include:
  2. Is the intention to hold on to these mortgages, or will they be securitised?
  3. What are the pros-and-cons of holding the mortgages versus holding securitised products?
  4. Will there be any scope for a capital increase or are all of the returns expected to be in the form of income?
  5. As the mortgage capital are repaid, what will happen to these monies? i.e. will they be distributed to shareholders or will new mortgage investments be sought out?
  6. Will there be any indication as to the credit quality of the mortgages? i.e. something along the lines of prime, investment grade and sub-investment grade? If so, how will these gradings be assessed? e.g. by an 24AM's management, the institution disposing of the mortgages, by an independent resource.
  7. The WhIT article states that gearing will be '...up to four times the value...' whereas 24AM's web-site says that returns will be achieved '...through low leveraged exposure...'. In my mind, these two statements are incompatible because the first suggests gearing of up to 500%. Have I got my wires crossed?
  8. How will the gearing be facilitated? e.g. by a bank (or other) loan, or other?
  9. How liquid is this market? If discount control is in operation then how easy is it likely to be for the company to be able to raise the cash required to buy back shares? Similar applies in the event that any loan covenants are breached, perhaps even more-so.

#9

I assume the mortgage portfolio to be purchased could be a blend of fixed, capped and tracker mortgages. If fixed or capped, the mortgages will have fixed income characteristics ( i.e. bond like) and will suffer when interest rates rise. The trackers should be fine though.

But I have to ask, why don’t I just by a bank like RBS or Lloyds who basically do mortgage lending as their core business? Especially as this investment trust will have to buy the mortgages in the secondary market from the banks (at inflated prices giving the banks some profit)!

 


#10

Yip, think you have just covered it for now @arkwelder.

 

We need a look at the prospectus.

 

It doesn’t sound like something I would but but it might be good for my Mum.


#11

I see that the prospectus for this is now available. Haven’t had a look down it myself, and not sure that I’ll have the time to do so within the offer period: applications are to be received by 1st July, being a week tomorrow (Wednesday). So not much time for any questions to be asked and answered. If going through a nominee account then the deadline might be earlier, assuming that a platform will facilitate an investment. (The way round this outside an ISA/SIPP would be to subscribe via the application form at the end of the prospectus and then, if required, transfer the holding into the nominee once the share certificate is received. Note the £10k money laundering threshold.)

Can be downloaded from this page under the Documents tab (might need to OK the usual Disclaimer first).

@whichinvest, @casper, @eduardo, @mikemoore, @jonno, @citygirl, @sandradore


#12

Thanks @arkwelder. I’m sure this will be appreciated.


#13

I like that when you are already online you get a message pop up telling you someone has mentioned you, or am I just getting too excited over small things :slight_smile:


#14

I forgot about this, I thought you were going to have a Q&A @whichinvest


#15

We were but they’ve been a bit flaky @citygirl