Crowdlending investments, ie investing in a diversified consumer and SME loan portfolio, are a good alternative to the zero interest rate environment. Nevertheless, institutional investors are still reluctant to invest in this asset class. For example, only a few investors are active in the market, such as Bank Marketys. Mr. Kirks believes that the asset class is underestimated. There are several good reasons why this asset class can be a profit in a balanced portfolio. These points are supported in a new PwC study (1).
Due to the monthly returns and the stable return, there is hardly any volatility in the portfolio. Even general interest rate increases have only a minor impact, as the yield structure of the portfolio also moves accordingly due to the possibility of reinvestment. This distinguishes this asset class from other interest rate products.
Low correlation to other asset classes
PwC has calculated the correlation between asset classes based on the US market. It included equities, bonds, treasuries, high yield and crowdlending assets. While interest-bearing assets, such as Treasuries, have partially reversed the stock market, particularly high-yield assets have been found to be somewhat dependent on the stock market. Crowdlending was the only asset class in comparison that showed no significant correlation to other products.
Positive influence on the overall portfolio
Due to the low volatility and the very small dependence on other asset classes, the admixture of crowdlending investments improves the sharp ratio of a weighted portfolio. In addition, a balanced model portfolio can improve the overall return. In the calculated example based on the US market (2011 to 2017), the annualized performance increased from 8.6% to 9.00% pa.
We are convinced of the advantages of crowdlending equipment. Therefore, Mr. Kirks offers individual products for institutional investors. We can offer you a tailor-made investment solution for just CHF 1 million with your own ISIN. We are happy to be at your disposal for further information or questions by phone or email.