TwentyFour: An expert partner in ABS

With more investors turning to asset-backed securities (ABS) to diversify their fixed income holdings, Doug Charleston explains why he believes TwentyFour Asset Management can be the ideal partner for those who are new to the asset class or considering a more significant allocation.

In my previous articles I highlighted the potential benefits of asset-backed securities (ABS) and collateralised loan obligations (CLOs), and explained why these markets can be an excellent diversifier for investors’ fixed income portfolios.

Having launched the first UCITS fund focused solely on European ABS in 2009, and the first ABS focused UK investment trust in 2013, TwentyFour is a recognised leader in this asset class.

With over £8bn of ABS assets managed across strategies and a five-year average annual trading volume of £5bn, ABS is a core business at TwentyFour that represents nearly a third of the firm’s total assets under management. The breadth and size of what we manage enables us to leverage close relationships with both issuers and banks in the market, which can offer potentially material benefits in terms of yield and the structuring of transactions for investors in our strategies.

Our 10-person team of asset experts, based in London, has been built deliberately to include expertise and experience across all elements of securitisation, covering buy-side, sell-side, trading, ratings, structuring and modelling. As an active manager, TwentyFour dedicates considerable resource to meeting new and existing ABS issuers all over Europe and performing due diligence on the underlying assets. This work gives us access to issuers’ management teams, culture and market position, which we consider to be as important as any cashflow model.

We are also one of the few managers in Europe that invests across the full ABS risk spectrum, from senior investment grade bonds to more specialist transactions, which we find improves our access to opportunities across the board. 

In our view, ABS remains a poorly understood asset class among the wider investment community, which is one of the reasons it continues to offer an attractive yield premium over mainstream markets such as corporate bonds for a given credit rating. As a specialist in the asset class, TwentyFour places great emphasis on investor education. Our Education Hub features a raft of materials on ABS, from written explainers to video animations, and our portfolio managers maintain a regular series of educational webinars on the key features of the market.

As such, we believe TwentyFour can be the ideal partner for investors either new to ABS or considering a more significant allocation. With strategies ranging from enhanced cash to direct asset-backed lending, we offer an entry point for investors with a range of risk appetites.