How P2P funds have fared over the past year
PEER-TO-PEER lending-focused investment funds are a popular way for investors to get exposure to the ever-growing P2P market.
But the unpredictable economic and political environment means the performance of these funds varies.
Net asset value (NAV) returns range from three per cent to 20 per cent while discounts to NAV have fallen as low as 20 per cent.
Here is how the P2P investment trust sector is faring.
P2P Global Investments
This was the first P2P-focused investment trust to launch, opening in May 2014 and includes lenders such as Zopa, Funding Circle and Lending Club in its portfolio.
Almost 60 per cent of the assets are in the US, with 23.2 per cent in Europe, 8.7 per cent in cash, 6.4 per cent globally and 2.2 per cent in Australia.
Just over half of the portfolio was focused on US consumer loans at the end of last year but it has recently adapted its strategy towards more asset-backed investments in a bid for a better risk adjusted return.
It had a pretty tough 2016 with its 12-month rolling NAV return of 4.45 per cent, under-performing against its target return of 6-8 per cent. Its low returns were blamed on rising rates in the US, exchange rates and the Brexit vote.
Over the past 12 months its NAV has grown 5.34 per cent and it is currently on a discount to premium of 20.8 per cent.
SME Loan Fund
The SME Loan Fund, set up by GLI Finance in 2015, invests in alternative finance businesses, predominantly in the UK, including P2P platforms such as Proplend and UK Bond Network. Almost two thirds, 63 per cent, of assets are in the UK, with 13.1 per cent in the US, 18.6 per cent in Europe and the rest in cash.
The trust has seen its NAV total return grow by seven per cent over the past 12 months and it is currently trading at a discount to net asset value of 10.3 per cent.
GLI Finance has proposed changes to the fund that would see it dispose of its holding in the trust, currently valued at £22.7m.
If approved, the changes would see Amberton Asset management, which is 50 per cent owned by GLI Finance, replaced as investment manager by SQN Capital Management.
It all forms part of GLI’s ongoing strategic review.
This was prompted after the company posted a £6.9m loss for the first half of 2016, compared with profit of 5.3m, blamed on the overspending of former chief executive Geoff Miller.
Ranger Direct Lending
The Ranger Direct investment trust focuses on platforms providing secured finance to businesses, mainly in the US.
This focus on US and much of the assets being dominated in dollars has helped Ranger avoid much of the volatility that Brexit has caused its peers.
It has three share classes, one for ordinary income, one for zero-preference shares, which were launched in May 2015 and a conversion or C share class opened in December 2016. Its NAV total return over the past year has been 19.9 per cent and it has seen 19 consecutive months of positive returns.
The ordinary income share class is currently on a discount to NAV of 10.5 per cent while the zero preference and c share classes are on 2.2 per cent and 1.2 per cent respectively.
Funding Circle SME Income Fund
Launched in November 2015, this investment trust backs loans on the Funding Circle SME Income Fund.
It works slightly differently to its peers in that it invests purely in loans on the Funding Circle platform. while others are spread across several lenders.
Its regional exposure is currently broken up as 73 per cent in the UK, 17 per cent in the US, two per cent in continental Europe and eight per cent in cash.
It has seen its NAV deliver total returns of 6.7 per cent over the past 12 months and is currently on a premium of 1.6 per cent.
The fund is currently planning to issue more shares to help it grow and meet market demands.
VPC Specialty Lending
VPC launched its own investment trust in 2015, backing platforms such as Funding Circle and Prosper in the US.
The investment trust is composed of 36 per cent marketplace loans and 39 percent in balance sheet investments, with the rest in shares, securitisation and cash.
Three quarters of the portfolio is in consumer loans and the rest towards small businesses. It has recently adapted towards a stronger focus on balance sheet lending after losses in the loans side of the portfolio. The majority, 78 per cent, of exposure is in the US, with 10 per cent in the UK.
Its NAV has returned 3.1 per cent over the past year and it is trading at a discount to NAV of 19.4 per cent.
Honeycomb Investment Trust
Launched in December 2015, Honeycomb invests in UK loans to consumers and small businesses, mainly originated by Honeycomb Finance.
It has returned 8.7 per cent over the past 12 months and is on a premium to NAV of 7.7 per cent.
The fund has backing from investing veteran Neil Woodford, who has exposure to it in his Equity Income fund.