Asset-Backed Lending in 2016: An Alternative to Banks for Alternative Investors

Financial markets had a turbulent ride in 2015, hitting a record high in May amidst sustained economic growth and suffering sharp losses in August, later followed by an accelerated uplift in October.

Last year was a great evidence of how unstable markets can be and that asset class performance can shift from month to month, thus making it difficult to identify a winning investment segment. Investors tend to question why they hold some asset classes while they are declining in value and whether or not it is the right time to get into the market or out of it.

One of the relatively secure alternative investment strategies may be to invest in asset-backed fixed income debt instruments. Investing in secured loans can be a great way to boost your savings and improve your portfolio.

A strong growth in investor demand for secured lending products has been reported in 2015 by a UK-based asset-backed lending specialist, Sensible Lender Limited (, which indicates investor appreciation of the potential benefits of these opportunities, as investors are able to gain access to a new asset class, offering a high rate of fixed return with little to no risk.

The business, which provides alternative financing solutions to both residential and commercial property owners across the United Kingdom, reported also that a combination of increasing demand for mortgage loans and growing interest in alternative investment opportunities had helped it grow by almost 70 per cent to break the £50m barrier for the first time in its 3 year history.

Sensible Lender brought several innovations into the market, including the development of its Peer-to-Peer Managed Crowdlending Accounts Program (P2P MCAP), which allows individual investors with limited capital to take part in some of the industry’s largest loans via a secure online lending platform.

The expanding lending firm is among the fastest-growing in the country. Since foundation, it has supported nearly 200 borrowers with record lending volumes in excess of £50m.

Managing Director of Sensible Lender, Stuart Pearson, said: “We’re looking to the future with ambition and confidence, and our company continues to grow and succeed every year. £50 million worth of loans is a significant milestone when you remember it has been less than a year since the company adopted its crowdlending model. With crowdlending, investors have a new avenue for diversification and the supremacy of banks as the go-to source of funding is weakening.”

Crowdfunding and crowdlending platforms are just beginning to take share from traditional funding sources, but it is already a clear demonstration of the fact that the time has come for an evolution of the financial services industry.

Analysts at Morgan Stanley Research predict a continuous growth of the marketplace lending sector in the coming years toward ~15 billion of annual origination by 2020 in the United Kingdom alone vs. almost 4 billion in 2015.

The peer-to-peer lending market is growing very rapidly and investors should definitely take advantage of this trend in 2016.

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