SFULC provides exposure to real-world private credit. While this enables sustainable yield, it also comes with risks that users should understand.
This page outlines the key considerations relevant to SFULC, without overstating or understating them.
Credit risk
SFULC is backed by private credit extended to real-world borrowers.
Borrowers may underperform, experience financial stress, or default. If this occurs, it can impact the yield generated by the underlying strategy and, in some cases, the value of SFULC.
This risk is inherent to all credit-based products and is not unique to SFULC.
How credit risk is managed
The underlying credit strategy is managed by Fulcrum Lending, a specialist private credit manager focused on U.S. multifamily real estate.
Risk management is embedded throughout the lending process, including:
- Asset selection focused on income-producing multifamily properties
- Conservative loan-to-value ranges with meaningful equity cushions
- Underwriting frameworks aligned with established agency standards
- Strong borrower requirements, including net worth and liquidity
- Loan sizing designed around realistic refinancing or takeout scenarios
In addition, structural protections are used to help preserve capital and cash flow in downside scenarios, including collateral protections, cash management controls, and interest reserves.
These measures are designed to reduce the likelihood and impact of loss, but they do not eliminate risk.
Asset class considerations
SFULC’s yield exposure is concentrated in U.S. multifamily real estate credit.
This asset class has historically demonstrated resilience due to:
- Essential demand for housing
- Diversified tenant bases
- Income-backed cash flows
However, performance can still be affected by:
- Macroeconomic conditions
- Interest rate changes
- Local market dynamics
- Property-level execution
Past resilience does not guarantee future performance.
Liquidity and pricing considerations
SFULC offers both primary liquidity through redemptions and secondary liquidity through onchain markets.
While redemptions are designed to be efficient and processed at net asset value, secondary market prices may fluctuate based on supply and demand.
Short-term deviations between market price and net asset value can occur, particularly during periods of volatility.