Launch of the Dynamic Bond Fund

New Fund Launch - A Fund For All Seasons
TwentyFour Dynamic Bond Fund
7% Target Distribution Yield*

Following the successful launch of its Monument Bond Fund, which passed the key £100m milestone in March, TwentyFour Asset Management is to launch a Dynamic Bond Fund on 26 April.

Mark Holman, Managing Partner of the independent City-based fixed-income specialist, says, “after 20 years of fixed income rally, investors need to pick their choice of fund very carefully as the easy returns are now behind us; we believe the Dynamic Bond Fund provides the most compelling solution”.

The Fund’s flexible mandate gives it a crucial advantage in that the portfolio managers are able to position it optimally as economic conditions change over time. The aim of the Fund, which is a UK authorised UCITS III fund, is to provide an attractive level of income along with capital growth throughout the economic cycle.

TwentyFour seeks to differentiate this Fund from most other strategic bond funds in the market in two key ways.

Focus on liquidity

The Fund will focus on liquidity, seeking to express the biggest risks such as interest rate and foreign-exchange risk in the most liquid form so as to allow the managers to adjust them tactically as conditions dictate. By contrast, in many portfolios the interest rate and currency risk are considered a by-product of the portfolio positions rather than actively-managed risks in their own right.

According to Holman “understanding how liquidity changes through the cycle is of paramount importance”. He points out that during the credit crunch, many managers were stretching for yield and were subsequently left with illiquid credit positions when the tide of liquidity withdrew from the market, the majority of losses occurring as a consequence.He adds “we would rather give up some yield in order to retain flexibility, because this is how we can produce more consistent returns for our investors. In the long run however, the returns should be higher, certainly on a risk-adjusted basis”.

High quality asset allocation

The Fund will be making a strong initial allocation to high quality asset-backed securities, which TwentyFour considers the most attractive sector in fixed income currently.

As Holman points out “there are very few managers that have our in-depth understanding of this sector, so we believe ourselves to be unique in this allocation”.

To illustrate the value of the Fund’s flexible mandate, Holman points to 2008: “During the thick of the credit crisis, European corporate bonds had their worst year on record, while government bonds had their best year for a decade. The ideal trade therefore was to go ‘short’ corporate bonds and ‘long’ government bonds. To achieve this however, a fund would need to have had liquid positions and a sufficiently flexible mandate”. Looking then at current market conditions, Holman says “it is safe to say that the next move in interest rates is up. Typically when rates go up, bond prices fall. For this reason we will be launching the Dynamic Bond Fund with very low interest rate risk, so as to minimise exposure to falling bond prices. If bond yields pick up dramatically we will position the Fund accordingly and potentially seek exposure and sensitivity to interest rates at much better levels”.

Compared with corporate bond funds, which are predominantly ‘long-only’ and generate yield from a single sector of fixed income, ‘strategic’ or ‘dynamic’ bond funds have a much wider investment remit enabling them to use a broad range of investment tools across the entire fixed income spectrum. They also have the ability to express short positions. These empower the portfolio managers to produce positive returns throughout the economic cycle. Holman says “it is natural that after such a prolonged rally, fixed income investors are now looking for more actively- managed funds for their fixed income investments in order to protect returns and mitigate the risk posed to their capital by rising interest rates”.

TwentyFour’s four-man investment team brings together both portfolio management and trading disciplines. As Gary Kirk, one of the Fund’s portfolio managers, comments “the Dynamic Bond Fund will enable investors to benefit from a complete range of investment skills built up by the portfolio managers through several credit cycles. The complimentary backgrounds of the team are ideally suited to managing a fund such as this”.

TwentyFour has appointed Gemini Investment Management as the UK distribution agent of the Dynamic Bond Fund.

Stuart Alexander, Managing Director of Gemini says “Gemini is all about distributing innovative product to the market and tapping into the experience of institutional and specialist investment teams, otherwise not accessed by the broader investment arena. The Dynamic Bond Fund is an exciting opportunity for investors who are seeking an alternative fund that brings together the different skills of a team that has an excellent track record in running credit products”.

Ends

For further information please contact:

www.twentyfouram.com
*The Distribution Yield reflects the amounts that may be expected to be distributed over the next 12 months as a percentage of the mid-market share price of the Fund at the relevant quoted. In addition to expected cash income, it includes the amortised annual value of unrealised capital gains/losses of current bond holdings, calculated with reference to their historic purchase price and expected redemption value (known as “effective yield from purchase price” method). It is based on a snapshot of the portfolio on that day. It does not include any preliminary charge and investors may be subject to tax on distributions.

Notes to Editor

Dynamic Bond Fund:

Regulatory Disclosure:
For Financial Advisers and Institutional/Professional Investors only – not to be relied upon by private investors or
any other persons. This document is for information only and does not constitute a recommendation or solicitation to subscribe or purchase any products. Prospective investors are strongly advised to speak to a professional adviser in respect of the information contained herein and before making any decision to invest. Neither TwentyFour nor Gemini is acting as your financial adviser or in any other fiduciary capacity with respect to an investment in the Fund.

This document is issued by TwentyFour Asset Management LLP, which is authorised and regulated by the Financial Services Authority.

Please remember that past performance is not a guide to future performance. The value of an investment and any income from it can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested. In order to offer a higher yield, a proportion of the Fund may be invested in higher risk securities that may increase the risk to your capital. Investments in fixed interest securities and bonds are subject to credit and market risk. The value of the underlying assets and therefore the value of shares in the Fund will be impacted by fluctuations in interest rates and the perceived credit risk of an issuer. Investments may be concentrated in any one country, sector or issuer. The Fund may have a significant exposure to high yield bonds, emerging market bonds or non investment grade or unrated bonds at any time. Non-investment grade bonds may increase the risk to capital. Derivatives may be used to achieve Fund objectives and allocations may vary significantly over time. The yield or the capital value of the Fund (or both) can fluctuate and investors may not get back their original investment. Being a new fund, there is a risk that if the anticipated size of the Fund is not achieved, the proportion of charges and expenses allocated to the investment may be higher and the value of the investment consequently reduced. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Exchange rates may cause the value of underlying overseas investments to go down or up. Investments in emerging markets may be more volatile than other markets and the risk to capital is therefore greater. Also, the economic and political situations may be more volatile than in established economies and these may adversely influence the value of investments made. Details of the specific and general risks associated with this Fund are contained within the Prospectus and the Simplified Prospectus of the Fund.

If you invest indirectly through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

About TwentyFour Asset Management:

TwentyFour Asset Management LLP was founded in 2008 with the aim of providing investors with advisory services and forward-thinking investment products enabling them to meet both the challenges and opportunities presented by today's credit markets.

• Highly experienced team of successful fixed income specialists.
• Unburdened by legacy distractions or conflicts.
• Flexible approach to ensure complete alignment of interests.
• New products targeted specifically at the current markets.
• Wide range of specialist advisory services.
• Rigorous investment and risk management processes.

TwentyFour Asset Management LLP is a Limited Liability Partnership incorporated in England and is authorised and regulated in the UK by the Financial Services Authority.

About Gemini Investment Management:

Gemini Investment Management works in partnership with both Professional Intermediaries and Investment Professionals to create the best in investment products along with providing bespoke marketing solutions to asset management businesses that may have limited expertise in the retail and wholesale marketplace. This arrangement enables firms to sell their products through a virtual sales operation whilst retaining their independence in brand and name.

Gemini collectively has over 75 years experience between the 3 senior directors. Experience that has seen not just the recent bear market but periods of volatility in 1987, 1991, 1997 and 2001 as markets have lunged from one crisis to another. The directors have worked in these markets and positioned funds and companies correctly to benefit from the opportunities that await the well prepared firms.

Gemini Investment Management Ltd is registered in England & Wales No.6795280 and authorised and regulated by the Financial Services Authority. Registered Number: 503402

8-10 Paul St, London, EC2A 4JH, Office 020 7426 4928, Email: info@gemini-im.com