Custom waypoints would work, but it would not be a smooth circle. And as far as I know looping the set of waypoints is not straight forward. Another way is the CWS (control wheel steering) function of some autopilots such as the King KFC 225 to hold a bank angle and to control the radius with the speed, but as you pointed out in a comment, it would not be perfect due to the wind.
Also a unit such as the Garmin 650/750 available for FAR 23 (small aircraft) has the new radius-to-fix and orbit functions:
