We like to take a regular look at investment trusts committed to the peer-to-peer (P2P) sector. Investment trusts are quoted shares and so have the potential upside of an equity asset (as well as the downside risk of loss). Fans of P2P-invested investment trusts argue that the relatively high dividend returns offset the risk.Below, we offer an excerpt of a report from P2P Finance News on one trust in this sector. It should be noted that net asset value (NAV) is very different from the share price – the two are related, but in ways that have investment experts scratching their heads.We note an attractive yield (currently at 5.91 per cent, according to Hargreaves Lansdown) and a valuation multiple (the number of times the share price goes into the market capitalisation – known as the price/equity ratio) of over 40. Some commentators might see this as a large multiple.In addition to the excerpt of the P2PFN report, we add some current data from independent financial advisers, Hargreaves Lansdown.
P2P GLOBAL Investments (P2PGI) saw its net asset value (NAV) return decline in January, which it blamed on "adverse foreign exchange movements".The alternative finance-focused investment fund reported a NAV return of 0.45 per cent in January, down from 0.75 per cent in December.
A Process Guide To Innovative Finance ISA InvestmentMoney&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders' capital is at risk. Read warnings on site before committing capital.All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.So here's our guide to the process:
Risk: Security, Access, YieldDo consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here's one of several earlier articles on security, access and yield.