- Shares in Augmentum Fintech, a venture capital investor in challenger banks and financial services disrupters, have bounced off a three-year low and investors are being advised to keep faith in the fund.
- The headwinds that have faced the fund appear to be easing, and interest rate expectations could be about to provide a boost to Augmentum’s fortunes.
Since launching in 2018, Augmentum Fintech has had a turbulent time. However, the fund’s backers are being told now is not the time to give up, as shares in the investment trust are starting to rally. The portfolio is diverse, predominantly made of investments in challenger banks and other disrupters within the financial services industry.
For a while, the fund faced several headwinds, which included the impact of Brexit on the fintech sector, a clampdown on peer-to-peer lending by regulators, and the general shift away from growth stocks. The pandemic also played its part, adding further pressure.
Nonetheless, the negative sentiment surrounding the fund appears to be changing. It is being observed that the problems previously bringing the fund down are beginning to be resolved one by one. Moreover, the impending upward shift in interest rates is expected to be a driver of positive change for the portfolio.
Anticipations are that Augmentum Fintech will benefit from the increase in rates, with digital banks and fintech companies being reliant on interest rate margins. Given the current economic conditions, there might be sooner-than-expected increases in rates by the Bank of England, which is being viewed as a strong tailwind for the portfolio of Augmentum, thus leading to a rally in its shares.
While it has been a frustrating period for the backers of Augmentum Fintech since its launch, the recent rebound in its shares and the prospective boost due to rate hikes might just be the silver lining its backers have been looking for.
