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The best performing alternative finance funds two months on from Brexit




By Daniel Lanyon on 24th August 2016

http://goo.gl/MesdY1

Equity markets took a battering in the weeks after the UK’s vote to leave the EU back on 24 June, but how did the listed alternative finance funds fare?

 

The Ranger Direct Lending and Funding Circle SME Income Fund portfolios were the best performing alternative finance investment trusts in the two months since the Brexit vote, according to research by AltFi.

 

On Friday 24 June markets went into panic mode thanks to a wave of uncertainty of currency volatility and the strength of both markets and the broader economy owing to the shock result of the referendum.

 

The £174m Ranger Direct Lending fund has seen its share price rally in the weeks since, partly as a result of its high dollar exposure which has meant sterling investors have seen a boost from the currency exposure alone.

 

On the day of the vote it was at 975p, today it is just under 1100p. Of course this doesn’t include movements in its discount or net asset value or dividends paid out.

 

Share Price of Ranger Direct Lending since Brexit

Source: Google

 

Ranger Direct Lending is a portfolio of mostly loans that are asset backed. They lend to SMEs but they take collateral either company equipment or buildings or directors' guarantees, which arguably gives better protection if there is default.

 

Loans are typically secured, have short duration and are high yielding. The fund managers can also take equity stakes in platforms or other companies serving the direct lending industry.

 

The fund, which is managed by Jack Antonini, Kenneth Scott Canon, Mark Dawson, William Kassul, Wes McKnight, Gary Melara, is on a discount of 6.7 per cent.

 

Ranger belongs to the cadre of investment trusts listed on the London market include the likes of the £868m P2P Global Investments, VPC Specialty Lending, Funding Circle SME Income, Honeycomb and GLI Alternative Finance.

 

While they are operating in slightly different spaces they are all involved in the non-bank lending market whether that be direct, balance sheet or marketplace lending.

 

As the graph below shows, in the days following the event all were hit pretty hard. While the largest of these P2P Global Investments and the second largest  Victory Park Capital Speciality Lending have not recovered to their pre-Brexit levels, Funding Circle SME Income and GLI Alternative Finance have both moved up.

 

Share Price performance of trusts since 24 June

 

 

Source: FE Analytics

 

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