The closed-ended portfolio’s performance continues to improve following a torrid period of volatility and transition to balance sheet lending exposure.
The £289m VPC Specialty Lending investment trust has recorded its highest monthly return to date for May 2018, according to stock market filings.
Its net asset value [NAV] total return for the month of May, the latest numbers released by VPC, was 1.03 per cent for the month. Returns comprised 0.94 per cent of income gains and 0.09 per cent of capital gains.
Income was predominantly from its balance sheet lending exposure, which is diversified across 25 platform deals, and which produced a gross return of 1.06 per cent.
The fund also saw capital returns, largely due to a large valuation increase in a minority equity position it has in a Latin American lending platform, resulting from a series B investment although details of the name of the company are omitted.
Analysts at Liberum say the fund's performance since the start of 2016 has been impacted by a steady stream of capital losses, mainly related to investments in securitisation residuals and marketplace loans but this effect has now diminished.
“These investments now account for only 6 per cent of NAV and should have a minimal impact in future. Further confidence was demonstrated by the recent 11 per cent dividend increase to 2p per share (we estimate this was covered 0.7x by NAV returns in the quarter after stripping out the impact of IFRS 9),” Liberum said.
VPC Specialty Lending currently trades on a -11.7 per cent discount to NAV.