April 2021 Monthly ReportCapspace Private Lending Fund
Strong consistent returns generated from a well-managed portfolio
The Directors monthly review our SME loan portfolio found that the portfolio remains in order with all loans performing as documented. The Loan to Value Ratio (LVR) increased to 50% in April. This movement was a result of advancing additional new loans within the portfolio, noting that the fund remains very well secured.
The Reserve Bank of Australia (RBA) official cash rate remains at the record low 0.10% for the foreseeable future. By supporting SME businesses, Capspace at an 8% per annum yield, is paying over 20 times the interest rate of current major bank 12-month term deposits, with the interest paid monthly into your account.
Business Conditions Reach Elevated Levels
During April the NAB released their Q1 2021 Business Survey. Business conditions and confidence strengthened in the quarter, with both now at +17 index points, well above their long-run averages. All the sub-indices of business conditions improved substantially – profitability, trading and employment are now all well into expansionary territory.
According to Alan Oster, NAB Group Chief Economist “The survey suggests that the economic recovery built further momentum in Q1.” Amongst our SME clients we would agree that a sense of ‘normalcy’ has returned to business trading and that this confidence enables future business investments to be made.
Private Debt An Important Investment Asset
Your investment in Capspace is an investment in private loans to heavily vetted & well secured SME customers. With official interest rates at 0.10%, many investors are looking for alternative assets to bank deposits in order to achieve an acceptable return.
Private debt is receiving favourable media coverage given that private debt investment returns are stable even when other markets are volatile, sustainable given the demand for loans for SME’s is considerable, have a low probability of capital loss given the security provided by loan customers and provide good returns even in a low interest rate environment (ie Capspace @ 8% per annum).
We believe an investment in Capspace is valuable part of any investment portfolio including those investments managed by SMSF.
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