Summary
Peer-to-peer lending has stood out amongst alternative investments, offering more transparency, tapping a growing market, and set to benefit from higher interest rates.
A report from Transparency Market Research has predicted that the P2P lending market will be worth £1trn globally by 2031. As investment opportunities grow, it is important to consider what it offers investors.
Earlier this year, research from Peer2Peer Finance News found that Innovative Finance ISAs (IFISAs) returned an average 9.01% in 2021, delivering stable returns through difficult economic conditions.
The asset class is also seen as offering a greater level or transparency than other alternative asset classes such as private equity or hedge funds - even though these may offer potentially greater rewards, albeit with greater risk.
Neil Faulkner, chief executive and head of research at P2P ratings firm 4thWay, said ‘The problem with whisky and arts, as with most alternative asset classes, is finding the data you need to assess whether it’s a good opportunity or not. That’s one of the reasons why P2P lending stands out. P2P is an unusual innovative idea in that it is so transparent and you can measure it so much more easily than most other alternative investments or innovations in investing.’
Faulkner added that the vast majority of P2P investors have enjoyed stable returns through the years, proving that the sector can offer investors value.
Peer2Peer Finance News research found that the average annual return on IFISA accounts in 2020 was 9.04%. During the 2020/21 financial year, the average target return offered across 32 IFISA accounts was 8.72%. In 2019, it was 8.45%, and in 2018 it was 8.3%.
Links: https://p2pfinancenews.co.uk/2022/11/01/p2p-investing-stands-out-in-record-year-for-alternatives/