P2P Has History With Mainstream Investors – Plus Loan Offer Latest

We report regularly on the slow uptake of peer-to-peer (P2P) by the mainstream media. Part of the reason it’s taken a while for P2P loans to be recognised as an asset class is the difficult start experienced by some of the early adapters. P2P loans and/or platforms feature in the portfolios of some investment trusts. It’s fair to say that the performance of some of them have caused a degree of nervousness in investment circles. See one of several earlier News articles. Rightly or wrongly (wrongly in many cases) P2P has been blamed for some of this.

Below we offer P2P Financial News’ take on the figures from one such investment trust.

HONEYCOMB Investment Trust reported a slight dip in net asset value (NAV) in January, which it attributed to “a seasonal increase in arrears”.

The London-listed fund, which invests in consumer, property and SME loans, posted a NAV return of 0.58 per cent last month under the new IFRS 9 accounting rules.

The new accountancy standards mean funds have to include potential losses in their portfolio.

“The company’s January return reflects the impact of an increase in IFRS 9 provisions related to organic portfolio due to a seasonal increase in arrears,” Honeycomb said.

“The performance of the structured and seasoned portfolios continues to be robust.”

Loan Offer Latest

As we write, the latest loan offering is 78 per cent subscribed in less than two full days of coming to market. The offer is property-backed and offers a fixed rate of 8 per cent over its five-year term.

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 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:

  • 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 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.


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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.