The troubled P2P Global Investments fund, on which we’ve reported here several times, has changed its name and finally reports some improved figure after some painful investment offloads.
It’s long been our view that the best way to profit from platform lending is to choose a platform with a conservative selection policy and risk analysis, and spread investments across a range of borrowing companies. Investors in quoted funds have had a tough time of it.
But – maybe – that could change. AltFi takes up the story.
The £1.1bn Pollen Street Secured Lending fund saw returns improve in the third quarter of 2019 as the fund continued to shift towards whole loans back by property.
Pollen Street Secured Lending, which sits on a 12.4 per cent discount to its net asset value (NAV), saw a return in NAV terms of 1.65 per cent in the three months to the end of September.
During this period the fund’s manager, Pollen Street Capital sold its largest position, its stakes in Castlehaven Finance, an Irish alternative development and bridging finance lender. This included a 25 per cent equity stake in Castlehaven Finance, together with other loan and debt interests.
The gross proceeds of c.€250m, have started to be deployed with four deals closed in October to deploy the proceeds of the sale.
Following the sale of the Castlehaven position, the portfolio mix has shifted slightly with a higher weighting of whole loans, according to analysts at Liberum. Real estate remains the highest sector weighting with 41 per cent of the continuing portfolio.
“The continuing portfolio has delivered consistent underlying income returns in the year. The overall NAV return was impacted in the early part of the year by issues relating to the legacy portfolio. The impact of the legacy portfolio and equity positions should decline as the exposure decreases. The sale of the Castlehaven equity position reduces exposure to equity investments from £45m to £34m,” Liberum said.”
Loans Latest
Mar-Key 6, rated A+, is 23 per cent filled at the time of writing. The yield on offer is 7 percent. Platform lending of the kind we facilitate here at Money&Co. can be a lucrative activity. The average yield achieved by our registered lenders over more than five years of loan facilitation on this platform is more than 8 per cent, before we deduct our one per cent charge. That return has handsomely outperformed retail price inflation, which has averaged around two per cent over this time.
Historical Performance And IFISA Process Guide
That figure is the result of over £18 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:
The ISA allowance for 2019/20 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.