Safeguard your income with TwentyFour Dynamic Bond

This fund's highly flexible approach means it can invest across a wide range of fixed-income assets, including investment-grade bonds, high-yield bonds, government bonds and asset-backed securities. Its use of hedging and derivatives, including credit and interest rate derivatives, also means it is well-placed to perform strongly throughout the credit cycle, in both rising and falling interest rate environments.

The fund aims to provide an attractive level of income along with the opportunity for capital growth, and has demonstrated good performance, outperforming its sector average over three and five years. The fund also has an attractive historic yield of 5.07 per cent.

The company that runs the fund, TwentyFour Asset Management, was set up in 2008 and focuses purely on fixed-income investments. MI TwentyFour AM Dynamic Bond is managed by two of the company's partners, Gary Kirk and Eoin Walsh, alongside portfolio managers Mark Holman, Felipe Villarroel and Pierre Beniguel.

The management team's specialist knowledge of fixed-income markets gives them a good understanding of how to work out credit risk - the likelihood of whether interest and capital payments will be made on time - which requires detailed due diligence. The fund also differs from other strategic bond funds due to its consistent weighting in asset-backed securities, an area in which the managers specialise.

Analysts at Tilney Bestinvest rate the management team highly. Ben Seager-Scott, investment strategy director, says: "TwentyFour is a relatively new investment boutique, but the managers have significant prior experience and are highly respected in the industry."

Jason Hollands, managing director at Tilney Bestinvest, adds: "We like this fund because of the flexibility of the mandate and also the willingness to use this - some funds that sit within the Sterling Strategic Bond Fund sector are less willing to move aggressively across the credit and duration spectrum.

"I think the fact that its managers come from an investment banking and capital markets background, rather than from traditional fund management, means they have more of a feel for the credit market and where it is going."

With a market capitalisation of around £1.5bn this fund is smaller than some other funds in the sector, meaning it is still nimble enough to implement its flexible approach.

The fund has a heavy weighting towards UK and European high-yield bonds, so it could be affected by the political uncertainty generated by the UK's vote to leave the European Union. However, the fund's most recent fact sheet says its managers had been adding to 'Brexit' hedges ahead of the vote.

MI TwentyFour AM Dynamic Bond could also suffer if defaults in European companies start to spiral, as this would negatively hit European high-yield bond holders.

"With such a high weighting to European high yield, the risk is that we could see problems in the European high-yield market, where historically the fund has tended to have a reasonable exposure," says Mr Hollands. "But I think the European high-yield market is probably in better shape than the US high-yield market because the latter has quite high exposure to oil and gas companies and related services, which is where we've seen some defaults."

And MI TwentyFour AM Dynamic Bond's flexible approach, strong historic performance and experienced management team suggest it is well placed to successfully adapt to whatever conditions markets throw up. Buy. EA.

Source: Morningstar as at 5/07/16

Performance

Source: Morningstar as at 5/07/16

Top 10 holdings as at 31 May 2016 (%)

Source: TwentyFour as at 31/05/16

Sector breakdown as at 31/05/16 (%)

Source: TwentyFour as at 31/05/16

IC Tip Rating