Honeycomb delivers on dividend amid strong numbers and low bad debts

As the fund plans to ramp up its SME lending book, its consumer and property book are also performing strongly.

The £499m Honeycomb investment trust has clocked up a 4.5 per cent return in the first six months of the year, according regulatory filings, and declared an interim dividend of 20p per ordinary share for the three-month period to 30 June 2018.

The fund, which invests in a broad range of alternative credit assets, is looking to increase its SME lending exposure in the coming months

Analysts at the investment bank Liberum say that the portfolio generated an annualised net return of 10.2 per cent after losses in the period, after factoring in a gross yield of 11.4 per cent and bad debts of 1.2 per cent.

Following on from a £100m cash raise in during the first six months of the year, the fund’s investment manager pointed to some cash drag on returns.

Liberum’s analysts say with bad debt costs of 1.2 per cent across the portfolio, the portfolio performing strongly when compared to peers.

“[It] is well below the level experienced by the peer group and is the key reason for the fund's superior performance to date. This reflects the manager's financial services expertise and differentiated origination capabilities."

“Honeycomb is on track to deliver another year of strong performance in 2018 following returns of 7.8 per cent and 9.1 per cent in 2016 and 2017, respectively.”

Its shares currently trade on a 10 per cent premium to NAV with a 7.1 per cent dividend yield).