RATESETTER’S new non-executive chairman Paul Manduca (pictured) has heralded the peer-to-peer lender’s “simplicity”, citing its provision fund as an example, on his first day in his new role.
The asset management veteran said that financial innovation can sometimes result in overly-complex products that investors cannot understand, which is “complacent and out of step with what customers want”.
“What attracts me to RateSetter is the simplicity of the business,” he said in an article posted on RateSetter’s website.
“The primary function of finance is to connect those who want to invest money with those who can put that money to productive use. The P2P sector is solving this age-old challenge in a refreshingly simple and innovative way.
“A good example of this innovation is the provision fund, which spreads risk across the entire portfolio and allows even the smallest investor to achieve diversification.”
The benefits of a provision fund have been debated by the industry, with P2P investment manager BondMason arguing that they should not be used at all. Zopa recently announced that it would be winding down its provision fund from the end of this year, but RateSetter maintains that the fund ensures diversification and more stable returns for investors.
Manduca is also chairman of insurer Prudential and has had a distinguished career in asset management as founder of Threadneedle Asset Management and former chief executive of both Rothschild and Deutsche Asset Management.
“Having built my career in asset management, I find it exciting to be involved in a company which is opening up a new asset class which sits at a point on the risk-return spectrum that was not previously available, fitting neatly between the certainty of cash and the more volatile nature of equities,” he said.
“To me, RateSetter is innovation in action. The company has bright prospects and I look forward to playing my part as its non-executive chairman, keeping up the good work, ensuring first class governance and allowing innovation to keep delivering for our investors and borrowers.”