Record-breaking dividend paid out by TwentyFour Income Fund during a standout year
TwentyFour Income Fund (TFIF) has reported another outstanding year in 2025, with its asset-backed securities (ABS) performing exceptionally well. The fund's success can be attributed to several key factors, including a robust macroeconomic environment, higher interest rates, and increased demand for Residential Mortgage-backed Securities (RMBS) and Collateralised Loan Obligations (CLOs).
The resilient labour market and overall economic stability in Europe provided a favourable environment for ABS investments, leading to a robust performance in European ABS. Higher-for-longer interest rates also contributed to a healthy income stream for floating-rate investors, benefiting funds like TFIF that specialise in floating-rate ABS.
The continued demand for RMBS and CLOs, along with the active participation of international investors in both ABS and CLO markets, supported liquidity and positive market conditions. Tightening spreads across the year further enhanced the return on investment for the fund.
Regarding CLOs specifically, TFIF noted that the CLO pipeline should create attractive investment opportunities, particularly as CLOs are increasingly refinanced early. This dynamic refinancing activity benefits the CLO market, offering investors like TFIF advantageous positions.
In its latest annual results, TFIF reported a total net asset value (NAV) return per share of 13.6%, with a full-year dividend of a record high of 11.07p - equating to a 10% yield. The fund's total net assets rose by 3.7% from £813.5m in 2024 to £843.8m.
Portfolio manager Aza Teeuwen is optimistic about the growth of the securitisation market in Europe in the coming years. He favours senior secured assets and prime borrowers in case of an economic slowdown. Teeuwen also holds a positive view on European and UK fundamentals, believing consumers and corporates are well-positioned overall.
Looking ahead, TFIF plans to allocate more to the growing significant risk transfer (SRT) market, which can provide further diversification and potentially enhance returns by transferring risk from originators to investors. While specific details about the SRT market's performance or contribution to TFIF's success in 2025 are not mentioned, the overall positive conditions in the ABS market likely supported related risk transfer strategies.
Proposed changes to capital charges could help encourage new participants in the European securitisation market, further boosting its growth potential. With these factors in mind, TFIF expects record issuance and demand for European ABS and CLOs to continue, making for an exciting future in the securitisation market.
The robust performance of European ABS and the increased demand for RMBS and CLOs offered advantageous investment opportunities for TFIF, contributing to its success in the real-estate sector. TFIF's plan to allocate more to the significant risk transfer (SRT) market indicates a strategic focus on diversifying its business portfolio and enhancing its investing in finance.
