FUNDING Circle’s fund has seen the value of defaulted US loans in its portfolio in August grow above the 2018 average.
An August update from the peer-to-peer business lender’s listed investment trust, the Funding Circle SME Income Fund (FCIF), revealed that while the number of defaults of US loans last month was in line with the previous months, at seven compared with an average of six, the value had moved higher.
“The company has been advised that this outcome is well within normal month-to-month statistical variability and US credit performance as a whole remains in line with expectations,” FCIF said.
The stock market update revealed FCIF’s net asset value return for August slid to 0.1 per cent from 0.4 per cent in July, attributed to increased impairment charges from the US loan default and the way its drawdown of its Citibank leverage facility has to be reported to take account of possible defaults.
“The benefit of higher income and cash receipts from the enhanced leverage will be felt from September onwards,” the update said.
It comes after FCIF announced in July that it would reallocate funds from the US to the UK and continental Europe due to increased currency hedging costs.
Its US exposure has fallen from 23 per cent to 22 per cent between July and August, while 64 per cent of the portfolio is invested in the UK and eight per cent in continental Europe.
The investment trust, which also declared a dividend of 1.312p per ordinary share, is currently trading on a premium to NAV of 4.2 per cent.