9.29.2016 - Portfolio Manager Philip Bartow discusses the launch of the Fund, the opportunity it presents, and how it fits with RiverNorth's offerings.
The objective of RiverNorth Marketplace Lending Corporation is to seek a high level of current income.
RiverNorth Marketplace Lending Corporation ("the Fund") seeks to accomplish its objective by constructing a diversified1 portfolio of consumer, small business and specialty finance debt assets generated from selected marketplace lending originators.
The Fund buys and holds whole loans originated from multiple online marketplace lenders, providing a bundled solution that simplifies access to the asset class. The strategy offers diversification across a variety of facets: underwriting, customer acquisition and servicing. Continuous due diligence is performed on the platforms utilizing proprietary systems to monitor daily loan-level data.
The default history for marketplace lending is limited and future defaults may be higher than historical defaults.
|For the Period Ending 5.31.2017||For the Period Ending 3.31.2017|
|May||3 Month||YTD||Since Inception†*||2017 Q1||Since Inception†*|
* RMPLX Inception Date: 9.22.2016
Performance data quoted represents past performance, which is not a guarantee of future results. Current performance may be lower or higher than the performance quoted. The principal value and investment return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Total return measures net investment income and capital gain or loss from portfolio investments. All performance shown assumes reinvestment of dividends and capital gains distributions. The Fund is new. Short-term performance, in particular, is not a good indication of the Fund's future performance and an investment should not be made based solely on returns. Other fees and expenses are applicable to an investment in this fund.
The Fund's gross expense ratio is 2.70%. The net expense ratio is 2.40%, which reflects a contractual expense reimbursement in effect through 8.19.2018. This ratio reflects the direct and indirect expenses paid by the Fund. Expenses are estimates for the Fund's first fiscal year and do not include the effects of leverage (if any). The net expense ratio represents the percentage paid by investors.
The Fund operating expense of 1.50% is equal to the net expense ratio minus the Loan Servicing Fee incurred by the Fund.The Fund's Management Fee is 1.25%. The Fund has contractually agreed to waive the Management Fee from 1.25% to 0.95% for the Fund's first two fiscal years.
* Pursuant to Rule 23c-3 of the 1940 Act, the Fund must make a quarterly repurchase offer of at least 5% of the Fund's outstanding shares. The Fund's Board of Directors will set the actual level of the quarterly repurchase offers. It is possible that a repurchase offer may be oversubscribed, in which case shareholders may only have a portion of their shares repurchased. Subject to the above, quarterly repurchase offers and liquidity are limited.
|30-Day SEC Yield (net)6||11.69%|
|30-Day SEC Yield (unsubsidized)6||9.09%|
|Weighted Average FICO7||709|
|Loan Repayment Status8*||99.08% current|
|Total Number of Loans||8,241|
|Average Loan Size||$10,136|
* Loan repayment status as of 5.31.2017. There is no guarantee the loan repayment status applies to the future.
Portfolio asset allocations are estimates made by the adviser and are subject to change.
|Top 10 States Total Exposure: 56.51%|
Allocations are estimates made by the adviser and subject to change.
Philip joined RiverNorth in 2015 and serves as Portfolio Manager. Philip comes to RiverNorth with 12 years of experience in Investment Management, Capital Markets, and Investment Banking capacities within structured finance, securitized products and real estate.
Patrick Galley, CFA
Patrick joined RiverNorth in 2004 and serves as Chief Investment Officer and Portfolio Manager. Patrick heads the firm's investment team and oversees all portfolio management activities at RiverNorth.
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See the prospectus for a more detailed description of Fund risks. Investing involves risk. Principal loss is possible.
The Fund's Shares will not be listed on an exchange in the foreseeable future, if at all. It is not anticipated that a secondary market for the Shares will develop unless the Shares are listed on an exchange. Thus, an investment in the Fund is not suitable for investors who might need access to the money they invest for several years or longer. The Fund may decline to accept any subscription requests for any reason regardless of the order in which such subscription request was submitted to the Fund in a particular subscription period. If a borrower is unable to make its payments on a loan, the Fund may be greatly limited in its ability to recover any outstanding principal and interest under such loan, as (among other reasons) the Fund may not have direct recourse against the borrower or may otherwise be limited in its ability to directly enforce its rights under the loan, whether through the borrower or the platform through which such loan was originated, the loan may be unsecured or under-collateralized, and/or it may be impracticable to commence a legal proceeding against the defaulting borrower. The Marketplace Lending Instruments in which the Fund may invest will not typically be guaranteed or insured by any third-party and will not typically be backed by any governmental authority. Prospective borrowers supply a variety of information regarding the purpose of the loan, income, occupation and employment status (as applicable) to the lending platforms. As a general matter, platforms do not verify the majority of this information, which may be incomplete, inaccurate, false or misleading. Prospective borrowers may misrepresent any of the information they provide to the platforms, including their intentions for the use of the loan proceeds. Marketplace Lending Instruments are generally not rated by the nationally recognized statistical rating organizations ("NRSROs"). Such unrated instruments may be comparable in quality to securities falling into any of the ratings categories used by such NRSROs. Accordingly, certain of the Fund's unrated investments could constitute a highly risky and speculative investment, similar to an investment in "junk" bonds. The Marketplace Lending Instruments in which the Fund may invest may have varying degrees of credit risk and the Fund will not be restricted by any borrower credit criteria or credit risk limitation. There can be no assurance that payments due on underlying Marketplace Loans will be made. At any given time, the Fund's portfolio may be substantially illiquid and subject to increased credit and default risk. The Shares therefore should be purchased only by investors who could afford the loss of the entire amount of their investment. The Company's fees and expenses may be considered high and, as a result, such fees and expenses may offset the Company's profits. A portion of the investments executed for the Company may take place in foreign markets. As a result of the foregoing and other risks described in this Prospectus, an investment in the Fund is considered to be highly speculative.
Diversification does not ensure a profit or a guarantee against loss.
1 The Fund is classified as non-diversified, which means the Fund may invest a larger percentage of its assets in the securities of a smaller number of issuers than a diversified fund. Investment in securities of a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among the securities of a greater number of issuers.
2 Duration is a measure of the sensitivity of the price of a fixed income investment to a change in interest rates. Duration is expressed as a number of years.
3 Yield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment's cost, its current market value or its face value.
4The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index of investment-grade fixed-rate debt issues with maturities of at least one year. The index cannot be invested in directly and does not reflect fees and expenses.
5 Distributions may consist of income, capital gains and return of capital.
6 30-Day SEC Yield reflects the dividends and interest earned during the period, after the deduction of the Fund's expenses. Unsubsidized 30-Day SEC Yield excludes contractual expense reimbursements, resulting in a lower yield.
7 FICO score is a type of credit score created by the Fair Isaac Corporation. Lenders user borrowers' FICO scores along with other details on borrowers' credit reports to assess and determine whether to extend credit. Small business loans do not have FICO scores.
8 Loan repayment status represents the percentage of loan payments that have been made as of their due date (current) versus the percentage of loan payments that have not been made as of their due date(delinquent).
The adviser has contractually agreed to waive the management fee from 1.25% to 0.95% for the Fund's first two fiscal years. As of the prospectus dated 8.19.2016, in addition to the management fee waiver, the adviser has contractually agreed to waive or reimburse expenses of the Fund (other than brokerage fees and commissions; loan servicing fees; borrowing costs such as (i) interest and (ii) dividends on securities sold short; taxes; indirect expenses incurred by the underlying funds in which the Fund may invest; the cost of leverage; and extraordinary expenses) to the extent necessary to limit the Fund's total annual operating expenses to 1.95% of the average daily Managed Assets through 8.19.2018. The net expense ratio represents the percentage paid by investors.
Leverage creates risks which may adversely affect returns.
CFA® is a trademark owned by the CFA Institute.
Past performance is no guarantee of future results.