New alternative loan fund lists on LSE

A third investment trust investing in alternative loans has launched on the London Stock Exchange.

Ranger Direct Lending began trading on Friday with a market capitalisation of £135m.

Like P2P Global Investments and VPC Specialty Lending Investments, two other investment trusts launched in the past year, Ranger Direct Lending will invest in loans made via direct platforms rather than through the banking sector.

Targeting a 10 per cent annual dividend yield, it will focus on business lending, rather than unsecured consumer loans. This will include invoice and asset financing, initially in the US, but it will later branch out into loans from other countries.

Its shares were up 4 per cent after the market closed on Friday.

The launch brings to more than £500m the total raised for investment trusts investing in non-bank loans, including the UK's fast-growing peer-to-peer lending sector.

The trusts have proved to be a popular way of investing in alternative finance, which has drawn attention with the promise of high yields and a lack of correlation with other markets.

UK fund managers, including the equity manager Neil Woodford and multi-managers Rob Burdett and Gary Potter, of F&C, have bought shares in alternative finance investment trusts.

Run by Texan fund managers Ranger Capital Group, Ranger Direct Lending will boost returns by borrowing up to the equivalent of 50 per cent of net assets. It will charge a 1 per cent annual management charge, plus a 10 per cent fee for outperformance.

The fund's managers said they had chosen the UK for a listing because of investors' greater familiarity with peer-to-peer and alternative lending.

Another fund, Aim-traded GLI Finance, invests in direct and peer-to-peer lending platforms as well as the loans they offer.

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