The fund will invest in small business loans in UK, US and Europe.
Peer-to-peer lending platform Funding Circle has become the first business in the sector to launch an investment trust, raising its full target of £150 million in equity from investors.
The Funding Circle SME Income trust, which entered trading today, will operate from Guernsey and will target a dividend yield of around 7% a year, investing in a portfolio of small business loans originated from around the world. The fund will become a strategic lender to the Funding Circle marketplaces and is intended to grow in line with those marketplaces.
Richard Boléat, Chair of Funding Circle SME Income Fund, commented: "Funding Circle SME Income Fund is a differentiated new entrant to the alternative lending sector, with unrivalled access to the Funding Circle marketplaces, a focus on small business lending in the UK and US, a conservative gearing policy and a competitive cost structure."
Samir Desai, CEO of Funding Circle, commented: "This will be the first fund to exclusively lend to small businesses through the Funding Circle marketplaces, and is a response to the huge demand we're seeing from a wide range of investors for small business loans. Today marks an important step on our journey to creating a global marketplace where any investor, big or small, can lend to small businesses across the world."
Just like any other investments, the trust carries a number of risks. According to the prospectus, the fund can invest in equity or debt in securitised vehicles that invest in credit assets.