Honeycomb fund sees “strong” July originations

The £442m Honeycomb Investment Trust increased its debt to equity ratio to 30.7 per cent in July reflecting a uptick in its orinations, according to a stock market update from the fund.

By way of comparison in June its debt to equity was 25.2 per cent.

Its gross investment assets therefore increased to £528m in the month, an increase of £31m over the month owing to a “strong” pick up in originations across its main three sectors of debt: consumer, property and SME lending.

The fund, which raised £100m in April, said recently that it wanted to increase its SME lending after seeing a cash drag slow  returns in May.

Honeycomb's net asset value (NAV) at 31 July 2018 was 1,022.5p, representing a total return of 0.63 per cent in the month. NAV total return to date in 2018 is 4.4 per cent (5.1 per cent before the impact of IFRS 9).

The analyst team at investment bank Liberum say the Honeycomb portfolio is on track to deliver another year of strong performance in 2018 following returns of 7.8 per cent and 9.1 per cent in 2016 and 2017, respectively.

"The previous monthly report provided further insight into the underlying portfolio performance. The bad debt expense of c.1 per cent across the portfolio is well below the level experienced by the peer group and is the key reason for the fund's superior performance to date."

“The shares currently trade on a 10 per cent premium to NAV (7.1 per cent dividend yield), reflecting the sector-leading performance since launch.”