January 2021 Monthly ReportCapspace Private Lending Fund
Rebuilding the Australian economy
We are cautiously optimistic as we enter 2021.
A quick scan of the latest economic data suggests the Australian economy is firmly on the rebound. The unemployment rate fell to 6.6% last month after peaking at 7.5% in July 2020.
Improved employment prospects combined with property prices surging in regional hotspots and positive signs of price growth in the capital cities has an increasing number of Australians feeling more confident about the year ahead.
Business confidence continues to grow
Capspace continues to scale quickly and meet the growing demands of SMEs in this promising business environment.
We have seen a notable shift in the expectations of Australian businesses; they are eager to capitalise on a resurgence in demand and take advantage of supportive stimulus and tax incentives. With social distancing measures relaxing and encouraging signs that the COVID-19 pandemic has become somewhat manageable, SMEs are actively looking for partners like Capspace to fund their expansion.
This fresh optimism is reflected in the latest business confidence figures from NAB. The major bank upgraded its economic forecast in early December and now expects a stronger near-term recovery in business activity in 2021.
Strong consistent returns generated from a well-managed portfolio
The Reserve Bank of Australia (RBA) official cash rate remains at 0.10%, a record low. Recent RBA statements support the maintenance of this low interest rate environment for the foreseeable future, with a particular focus on achieving much lower levels of unemployment.
By supporting SME businesses, Capspace at an 8% per annum yield, is paying nearly 10 times the return of current term deposits, with the interest paid monthly into your account.
Please also find attached your Investor Statement detailing the interest paid to you over the six month period until the end of December 2020.
Finally, a word on our SME loan portfolio. Every month the Directors review the portfolio in detail to protect all of our investments. Our portfolio remains in order with all loans performing as documented. The Loan to Value (LVR) improved to 52% over the month, even as our loan portfolio increased in size.