Two debt-focused funds that pay good dividends

TwentyFour Asset Management’s two debt-focused investment trusts are producing healthy payouts

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It has been a difficult year for investors in government bonds. Yields on ten-year issues are very low (1.6% in the US, 1% in the UK, just positive in Japan but just negative in Germany) but rising as prices fall, hitting capital returns and turning total returns negative. Most debt funds, however, have not only generated positive, if modest, capital returns but also paid dividends with a yield of more than 5%.

Typical are the two listed funds of TwentyFour Asset Management: the £575m Income Fund (LSE: TFIF) yielding 5.7% and the £180m Select Monthly Income Fund (LSE: SMIF) yielding 6.4%. The former invests in UK and European “asset backed securities” such as packages of mortgages and secured loans; the latter in the debt of UK and European banks and insurance companies as well as asset-backed securities and other high-yielding debt.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.