Cambridge Judge Produces Benchmark Report On Pre-Virus AltFi World


Regular readers will be aware that the Cambridge Centre for Alternative Finance (CCAF), part of the University of Cambridge Judge Business School, is a friend of Money&Co. Here's just one of our recent reports on an institution we consider the leading source of data and analysis in the alternative finance industry.The CCAF has published the single most comprehensive report on the evolution of alternative finance - although, of course, all the meticulous research was done before the outbreak of Covid-19. Crowdfundinsider takes up the story:

The benchmarking report provides unique detail and insight into the changing landscape of Fintech and digital finance.The CCAF benchmarking report was supported by Invesco, the Inter-American Development Bank, IDB Invest (the private sector institution of the IDB Group) and CME Group.CCAF incorporated data from approximately 1220 different firms representing the largest data-set every collected covering Fintech. The areas of alternative finance include peer to peer (marketplace) lending, balance sheet lending, debt-based securities, invoice trading and equity crowdfunding. CCAF noted an increase in the number of firms operating in multiple jurisdictions as the sector matures and adapts.It is interesting to note that global transaction volumes declined from 2017 ($419 billion) but this was largely due to a rapid shift in China – the largest alternative finance market in the world. Excluding China, global transaction volume grew by 48% in 2018.

Historical Performance And IFISA Process Guide

  • 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 over £20 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.
  • Money&Co. has been lending for over 5 years and has only had one bad debt so far, representing a bad debt rate of 0.03 per cent per annum.
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:
  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you've bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
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.

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