P2PGI expects further decline in US exposure as it shifts to speciality finance
PEER-TO-PEER Global Investments (P2PGI) is anticipating further reductions to its exposure to US consumer loans and a “more flexible investment strategy” through the merger of its manager MW Eaglewood with Pollen Street Capital.
A statement read at the P2P-focused investment trust’s annual shareholder meeting on Thursday, from chairman Stuart Cruickshank, said 2017 has so far been more positive than the second half of last year.
He said the investment company had less cash to invest last year as it was protecting the portfolio from foreign exchange movements in the wake of the Brexit and US election votes as well as interest rate hikes.
Cruickshank also cited the negative impact of problems at US consumer platforms, but said a reduction in exposure to this area as well as a shift to speciality finance with Pollen Street would help the fund.
“Opportunities continue to expand,” he said.
“Pollen Street and MW Eaglewood believe that speciality finance markets continue to offer attractive investment opportunities.
“It is likely that the US consumer loan asset class will further decrease as a percentage of the company’s overall portfolio.
“Whilst unsecured consumer loans in the UK benefit from lower funding costs, there is some competitive tension in the most prime grade bonds in which the company has traditionally invested.
“At the same time, new and more attractively priced opportunities are evolving in other parts of the lending market.”
The chairman’s comments come a month after it emerged that Pollen Street Capital is to take a controlling stake in MW Eaglewood, manager of P2PGI, in an effort to boost returns and diversify the portfolio.
P2PGI posted its 36th consecutive month of positive net asset value (NAV) returns during May as it continues its shift from US loans to asset-backed products.
The investment trust is currently trading on a discount to NAV of 11.4 per cent.