PEER-TO-PEER funds are performing better than their share prices suggest and could present an opportunity for canny investors.
A number of P2P-focused investment trusts listed in London have seen their market value plummet in the wake of the uncertainty caused by the Brexit vote. P2P Global Investments (P2P) and VPC Specialty Lending (VSL) are trading at near 20 per cent discounts to their net asset value, putting them among the worst performing of all investment trusts in the FTSE All Share index.
But analysis from investment bank Jefferies found that the quality of the loans the trusts are buying is far better than their share prices indicate.
“An analysis of a number of the loan books of platforms from which P2P and VSL purchase loans from points to only a limited deterioration in loan performance,” said the research. “This is at odds with current market sentiment towards the funds.”
Industry insiders have also highlighted the disparity between the trusts’ share prices and the quality of their investments, attributing it to fears that loans will default, rather than a high quantity of loans actually defaulting.
Uncertainty surrounding the UK’s position in Europe has weighed heavily on the wider financial sector since the referendum on 23 June, partly due to fears that companies will not be able to ‘passport’ their services around the continent easily after the UK leaves the single market.