P2PGI sees NAV rise, but warns attractive returns are becoming scarce

P2P GLOBAL Investments (P2PGI) has seen its quarterly performance improve year on year but admits it has been tough to get decent returns over the past three months.

A second-quarter update from P2PGI on Tuesday showed a net asset value (NAV) return of 1.15 per cent, up from 1.08 per cent in the same period last year and on par with the 1.17 per cent in the first three months of 2017.

It has been a busy quarter for the investment trust after a management review was completed and concluded that a merger would take place with current manager MW Eaglewood and Pollen Street Capital to help improve performance.

The update said the investment trust was still focused on moving towards asset-backed and specialist finance rather than consumer loans.

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“Attractive risk‐adjusted yields in both liquid and illiquid credit remain scarce,” the newsletter said.

“During the quarter, spreads in the fixed income market have again tightened. Gross yields in UK unsecured consumer loans have further declined, as the competition remains fierce.

“This suggests that there will be less income to absorb potential future losses.

“In light of this, the investment manager has been increasing exposure to secured loans and products with an asset-backed structure.”

Meanwhile, P2PGI has also continued to reduce its exposure to US consumer loans, which now make up 39.3 per cent of its portfolio, compared with 55.4 per cent at the end of last year.

Its NAV for June was 0.29 per cent, the 37th consecutive month of positive returns, taking the return since inception in June 2014 to 16.79 per cent.

P2PGI, which also announced a dividend of 12p per share for the quarter, is currently trading on a discount to NAV of 12.6 per cent.

Read more: P2PGI expects further decline in US exposure as it shifts to speciality finance