Honeycomb buzzing about SME investment opportunities

THE HONEYCOMB Investment Trust expects to expand its small business exposure after starting the second half of the year with its net asset value (NAV) up 0.63 per cent.

The alternative finance-focused fund revealed in a performance update for July that it has returned 5.14 per cent so far in 2018.

It has also released a half-year update, which showed its NAV total return of 4.51 per cent up to June 2017, with a 0.73 per cent boost from its £100m fundraising in April.

The report showed the majority of the portfolio, 60 per cent, is in consumer loans, with 33 per cent invested in property and seven per cent in credit to small- and medium-sized enterprises (SMEs).

However, the managers believe there is an “attractive opportunity” to grow the fund’s SME exposure, according to the report.

Read more: Excess cash eats into Honeycomb’s NAV returns

“Honeycomb has continued to deliver consistent performance, despite some cash drag from the April fundraising,” an Numis analysts’ note said.

“The manager is seeking competition in mainstream unsecured lending, but believes it can maintain risk-adjusted returns through its specialist origination channels and ability to underwrite complex deals.

“It is also positive that the fund recently increased portfolio disclosure in its quarterly factsheet which make it easier for investors to understand the drivers of returns and credit performance of each asset class.”

The fund is currently trading at a premium to NAV of 10 per cent.

Read more: Honeycomb NAV keeps improving