admin Jul 06, 2018
Crowdlending investments, that means investing in a diversified consumer and SME loan portfolio, are a good alternative to the zero interest rate environment. Nevertheless, institutional investors are still reluctant to invest in this asset class. For example, only a few investors are active in the market, such as Bank Julius Baer. We at Crowd4Cash believe that the asset class is being massively underestimated. There are several good reasons why this asset class can be a profit in a balanced portfolio. These points are also supported in a new PwC study (1).
Lower volatility
Due to the monthly returns and the stable return, there is hardly any volatility in the portfolio. Even general interest rate increases have only a minor impact, as the yield structure of the portfolio is also correspondingly affected by the reinvestment opportunity. This distinguishes this asset class from other interest rate products.
Low correlation to other asset classes
PwC has calculated the correlation between asset classes based on the US market. It included equities, bonds, treasuries, high yield and Crowdlending assets. While interest-bearing assets such as Treasuries have partially reversed the stock market move, especially high-yield assets have been found to be somewhat dependent on the stock market. Crowdlending was the only asset class in comparison that showed no significant correlation to other products.
Positive influence on the overall portfolio
Due to the low volatility and the very small dependence on other asset classes, the admixture of Crowdlending investments improves the sharp ratio of a weighted portfolio. In addition, a balanced model portfolio can improve the overall return. In the calculated example based on the US market (2011 to 2017), the annualized performance was able to increase from 8.6% to 9.00% p.a.
We are convinced of the advantages of the investments in Crowdlending. Therefore Crowd4Cash offers individual products for institutional investors. We can offer you a tailor-made investment solution for just CHF 1 million with your own ISIN. We are happy to be at your disposal for further information or questions by phone or email.
(1) Alternative Lending: Asset Class Characteristics
