THE Funding Circle SME Income Fund (FCIF) has reported its first drop in net asset value since 2016 after adopting new IFRS 9 reporting standards.
The new accountancy standards mean funds have to include potential losses in their portfolio. The fund, which invests in loans originated by peer-to-peer lender Funding Circle, revealed its returns were down 0.6 per cent in April after allowing for a 1.1 per cent provision.
This was the first drop in NAV since the fund’s first monthly update in November 2015 when it was down 0.1 per cent. The NAV had been consistently positive up until last month.
Analysts said the provision was smaller compared with the fund’s peers, with P2P Global Investments reporting a 2.2 per cent impact and VPC Specialty Lending estimating 1.1 per cent.
Only Honeycomb had a smaller impairment estimate at 0.8 per cent.
“FCIF remains our favoured play in the direct lending sector,” a Numis note to investors said.
“We believe the fund offers an appealing yield, and benefits from an attractive fee structure with no management or performance fees at the fund level.
“In addition, we have been particularly impressed by Funding Circle’s credit process, which uses technology to make the review by human underwriters more efficient.”
It comes after FCIF raised £25.5m through the oversubscribed sale of treasury shares and said it is considering more issuances over the next few months.
The London Stock Exchange-listed investment trust said it had sold 24,928,394 shares to a range of existing and new investors.