Volatility in financial markets and a rising interest rate environment, has left most investors anxious. An allocation to marketplace lending may offer some respite, providing investors stable monthly cashflows and a technology enabled shift in the way consumers and small businesses access capital.
Marketplace lending is a US$200 billion asset class globally. Bringing together finance, risk management and technology; marketplace lending takes place through online platforms that use technology to bring together creditworthy borrowers with investors who are seeking attractive yield-generating investments.
Marketplace lending shares similar characteristics with short-maturity bonds and high-yield bonds. For this reason, many investors look to marketplace loans to diversify their investments in equities, property and corporate bonds while receiving monthly cash
flow of principal and interest.
Marketplace lending provides a combination of better yield and low duration compared to traditional fixed income products today. Marketplace lending’s low duration reduces sensitivity to rising benchmark interest rates compared to longer term bond products.
When compared to other asset classes such as equities, bonds and real estate; marketplace lending has low correlation making it an asset class to consider as part of investment portfolio diversification strategy. Much of this is driven by marketplace lending’s underlying credit exposure to a large number of SMEs and consumers rather than from any single corporate credit exposure.
PeerPower is the leading Online Marketplace Lender based in Thailand. Our mission is to provide better rates for business owners and better returns for investors.
Every business listed on PeerPower has passed our rigorous credit assessment process. Though it is important to remember that some businesses will not be able to fully repay their loan. We refer to this as “bad debt” and we take active steps to reduce the impact it has on your returns in 3 ways:
1. Machine learning credit models
Our proprietary credit model uses thousands of data points across to assess the creditworthiness of every business that applies. We take a holistic view across business financial performance and business owner financial obligations
2. Expert judgement
In addition, each business is manually assessed by a Credit Specialist. They use a combination of industry experience and our credit model to assess each application. Issues which are
identified would have to be clarified with the borrower before loans are approved.
Spreading your lending across many businesses is the best way to earn stable returns as it reduces the impact of businesses being unable to repay their loans. By using our auto-invest tool, you can easily lend to many businesses to quickly build a diversified portfolio.