Direct lending mutual funds have been praised for their exposure to affordable housing, energy efficiency and regional development.
Analysis by trade organization the Association of Investment Companies (AIC), found that the debt-direct lending sector, which includes alternative finance-focused funds such as Honeycomb and VPC Specialty Investments (VSL), has yielded 16 percent and 44 percent in the past. five years.
The industry average is seven percent, according to the AIC.
An AIC webinar this week also revealed that in addition to high returns, the sector can also provide exposure to clean energy, affordable housing and energy-efficient homes.
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Matthew Potter, partner at Pollen Street Capital (PSC), which manages Honeycomb, said the investment manager is passionate about making a positive impact.
“It is only recently that we have seen an increase in research and data on the critical role non-bank lenders play in the UK economy, in areas as diverse as boosting financial inclusion, regional economic development, green transport, energy efficiency in homes. and more,” he said.
“We are passionate about the potential for positive impact through the loans we provide to non-bank lenders. Through this lens, we assess opportunities to invest wisely, rather than just applying environmental, social and governance checklists.”
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He said PSC’s credit facilities have supported several loan initiatives, including providing more than 11,000 households with a new boiler that will both increase energy efficiency and reduce energy bills, and support government emergency loans.
Gordon Watson, partner at Victory Park Capital Advisers, manager of VSL emphasized that as a signatory to the UN Principles for Responsible Investment, the fund recognizes the importance of responsible investment in the long term.
“This is demonstrated by our track record of providing capital to companies promoting important social issues, including access to capital and financial inclusion,” he said.
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