Funding Circle SME Income fund will reduce its exposure to US loan assets and is in discussions with the British Business Bank to increase leverage on its portfolio through a more formal partnership with the wider Funding Circle group, according to regulatory filings.
In the fund’s annual report it said its shareholders were keen to see cash invested away from the US and towards the UK and Continental Europe. As a result, US holdings will fall by up to 10% of the total portfolio. While it considered focusing the portfolio just on UK loan assets it decided that some US exposure reduces the risk profile of the fund through geographic diversity.
According to Funding Circle SME Income’s fact sheet from May 2018, the portfolio has 68.4% in the UK, 25.3% in the US, and 6.3% in Europe. The move follows recent guidance from the fund’s board that it had reduced its target dividend owing to hedging costs increasing as well as lower gearing owing to amortisation of a funding line from the European Investment Bank.
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