Changes to ISA rules – The recent market weakness has meant that shares in P2P Global Investments (P2P), (the specialist investment trust that provides exposure to a portfolio of peer-to-peer loans) have fallen from more than £11.50 in February to around £10 and now trade at a small discount to NAV with a prospective yield of 6%.
We mentioned in a previous blog that ISA rules have been amended so that now you can include investments into Peer-to-Peer within an ISA. Peer to Peer loans allow people with spare cash to lend directly to people or businesses who want a short-term loan. By cutting out the middleman they are able to offer ‘savers’ a higher return on their money, while allowing borrowers to obtain funds at a cheaper rate.
The peer-to-peer industry has grown dramatically since the financial crisis and is now well established in most of the developed economies around the world.
P2P Global Investments raised £200m when it floated on the London Stock Exchange in May 2014 and has since had two further share issues including separately listed C shares that came to the market in June.
The fund invests in a portfolio of peer-to-peer loans with targeted annualised returns of 5% to 15% spread across multiple platforms, countries and credit risks, with the aim of generating an attractive level of income and capital growth. It hopes to pay an annual yield of 6% to 8% with quarterly distributions, and if held in an ISA there would be no tax to pay on the income.
If you are unaware of this savings proposition, seek advice from a good IFA.