Last Updated: November 27, 2023
How has Wealthsimple Private Credit performed since its inception?
|June1||July||August||September||October||Inception to Date|
|Distribution per Share||$0.2256||$.0776||$0.3026|
|Net Asset Value per Share||10.03||10.12||10.26||10.25||10.08|
Returns tracking file here: Private Credit Fund Returns
Total returns for the fund are 3.8%2 since inception. October’s return was -0.9%, a partial reversal of the mark-to-market gains in the value of the loans in the third quarter (and the type of mark-to-market fluctuation that’s common for this type of loan). All loans in the portfolio are currently performing as expected.
Private credit total returns are made up of two components: 1) yield and 2) gains and losses to the fund’s value.
The yield generally consists of interest payments paid by borrowers. You can think of it almost like a dividend payment issued to stockholders. In October (the most recent distribution), the fund distributed $0.0776/share, which translates to a 9.0% annualized distribution yield.3
The fund value is the market price, or “fair value,” of the loans and any other assets in the fund (e.g. interest that is accrued but not distributed to shareholders). This is very similar to owning a stock: its value changes as the market goes up and down. In the case of the Wealthsimple Private Credit fund, the value of the fund has increased by 0.8% since inception.
How is the fund positioned?
We believe the fund is defensively positioned to manage risk while delivering attractive risk-adjusted returns. The portfolio is made up of 100% floating rate debt, so as interest rates change, the rates paid by lenders will increase or decrease. It is 100% senior secured/first lien credit, meaning that the fund will be first in line to get paid back if borrowers run into trouble. The weighted average loan-to-value4 (the amount of money borrowed in comparison to the value of the collateral) is 43%.
1 The fund was substantially invested in cash for the month of June as the portfolio was established.
2 Between the beginning of the fund and the end of September, the management and performance fees were waived to facilitate certain portfolio investments. In the absence of these temporary waivers, performance figures would be lower.
3 Annualized distribution yield based on $0.0776/share, divided by a starting NAV of $10.25, and multiplied by 12. To calculate this rate, we take a partial year distribution and convert it to a full-year amount as if it were paid in each period. We then divide this annualized amount by the fund's value at the start of the period. Distributions are not guaranteed. Past performance does not guarantee future results.
4 based on par value as of September 30, 2023