If you like doom and gloom, the peer-to-peer sector, with the recent high-profile collapse of Lendy, provides plenty of cheap thrills. Add in the troubles that Funding Circle, the P2P sector’s biggest player, has been having with its investment trust, and it’s time to get the popcorn out and enjoy the double bill.
However, it would be very wrong to judge a whole sector by the failed high-risk strategy of one player, as Money&Co. CEO, Nicola Horlick argues
Moreover, not every P2P platform has messed up an investment trust.
SHAREHOLDERS in Funding Circle’s dedicated investment trust have backed winding down the fund.
An extraordinary general meeting (EGM) was held… where it was agreed that the investment objective and policy of the fund be modified to facilitate a managed wind-down.
It has also changed its name from the Funding Circle SME Income Fund, to the SME Credit Realisation Fund Limited.
The board of the investment trust said it wants to return capital to shareholders in a timely manner, while maximising the value it can get from the company’s investments.
Shares will remain listed and tradeable as long as practicable during the wind-down, the board said. It will switch from its current strategy of making regular share repurchases to a quarterly redemption cycle. As the proceeds from asset sales build up, the directors will have the discretion to return capital to shareholders on a pro rata basis, and can make ad hoc returns if there is excess cash.
Loans – Latest News
The latest loan from property-backed Seascape is now available. This A-rated tranche yields 8 per cent gross and has a five-year duration.
A Process Guide To Innovative Finance ISA Investment
Money&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 £17 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. The annualised bad rate on Money&Co. loans in five years of trading is under 0.04 per cent.
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:
The ISA allowance for 2018/19 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do 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.