Monthly Letter – June 2023

“Investing involves managing risks, and the past year has served up no shortage of warning signs. From recession fears to the continuing war in Ukraine to geopolitical tensions rippling across the globe, investors have had to navigate an uncertain path in search of returns.”

— Bloomberg

The US Dollar recently dropped to a 15-month low against an index of rival currencies, which bolstered expectations that the Fed could soon end its campaign of monetary tightening without tipping the world’s largest economy into recession. Markets are pricing in the near certainty of a quarter percent hike in July in the United States, with expectations of rates rising to a peak of around 5.4%. In the United Kingdom, the prospect of a sustained rise in the Bank of England base rate to above 6% is now almost completely off the table.

Geopolitically, we continue to monitor the ramifications of the war in Ukraine, and the ongoing tensions between China and Taiwan. Artificial Intelligence is one of the biggest disruptors being talked about in recent times, and it is mainly driven by the semiconductor industry. Taiwan dominates the semiconductor industry in the world today. For the most sophisticated chips, 90% of the world’s supply comes from Taiwan. So what potentially happens between China and Taiwan, and how the US responds, is something that we are closely monitoring. The silver lining of these tensions is that other emerging markets could benefit by becoming more dominant players in international trade. Ida Liu, Global Head of Citi Private Bank, recently commented, “This ongoing bifurcation between the US and China represents opportunities. There’s more upside in emerging markets in the coming years, particularly since the US dollar has potentially peaked. There could be some very interesting opportunities in emerging markets, and because of this bifurcation, you’re seeing a new sort of pattern in global trade. For example, Mexico is going to continue to benefit from near-shoring with the US. The movement we’re seeing in the diversification of companies based in China will result in a lot of different countries becoming beneficiaries in the next several years from the change and the patterns seen in global trade.”

Closer to home, at AGC, the performance and health of our investment portfolio has proved resilient during the first half of the year. Last year, we transitioned the pricing on our facilities to a fixed/floating model, where we are tracking various global central bank rates. This change in pricing has proved fruitful for our fund’s financial returns and so we are further increasing the target net return range of our fund to 7-9% per annum for this year. We feel optimistic that in the current interest rate environment and with a solid focus on good portfolio management, we will be able to achieve a financial return within this range for this year.

In June, we published our sixth annual impact report. As per past editions, the report provides insightful detail on how we have been utilizing our investors’ capital to extend financing to local SMEs across the globe. As of Q1 2023, cumulatively we have extended over $6.3 billion in funding to over 38,000 SMEs, supporting 2.1 million jobs in 66 countries, with an average transaction size of $4,573. Around 45% of the SMEs in 2023 were women-led.

In AGC staff news, we recently welcomed a new employee. Francesca Paggetti joined us as a Risk Associate where she ensures investment risks are properly assessed, considered, and mitigated against. She joins us from American Express where she worked in their corporate underwriting team. She is based at our London office.

Our priorities remain: safeguarding our investors’ capital, investing prudently and staying true to our mission of providing liquidity to SMEs. As always, if you have any comments, suggestions or concerns, please do not hesitate to contact Sudha Bharadia, Co-CEO at

The AGC Team

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