Manged and self managed direct lending


A response to increasing direct lending market opportunities

Amongst savers and investors there have always been early adopters, such as those who have already established portfolios across many platforms in the Direct Lending (Peer-to-Peer) industry that they monitor closely.  However, the scale and size of the Peer-to-Peer (P2P) lending pool now means that even for these savvier “investors” who have set their risk appetite and structured their own due diligence, this has almost become a full-time job.

Considerations involved in managing your direct lending portfolio

The major considerations involved in running your portfolio are:

  1. Reviewing platforms periodically for due diligence
  2. Assessing each loan opportunity, via on-line auctions requiring timeliness.
  3. Ensuring diversification across platforms and loans.
  4. Ensuring your interest income and capital repayments are reinvested quickly and efficiently

Managing this whole process manually may well involve too much work for many people, particularly when you look at the return against time invested. Time is valuable and what started as a hobby can become all-consuming. This would push many people, who have typically been just deposit account-holders, to reconsider the whole P2P Lending proposition. Before throwing the towel in, it is however, worthy of more research as there are “fund and forget” options out there where experienced teams do all this work, enabling easy diversification.

Mixing managed and self-managed 

For some of those already engrossed in the evolving Direct Lending P2P lending market, the strain on their time with the volume of opportunities increasing requirements for diversification and due diligence to ensure they win the battle against default rates, means many are considering a plan B. Plan B can be to move to mixing their portfolios of “self-managed” and adding a new element of “passive”.

The benefits can be two-fold: wider diversification supports the old-adage of “not keeping all your eggs in one basket”; and taking a chunk of time out of their busy schedules solving the modern-age problem of time-deficiency.

Using a managed direct lending platform like BondMason

Another unique advantage of a managed platform such as BondMason, is access to other forms of Direct Lending not accessible to retail clients through classic P2P platforms, which provides another element of diversification and opportunity for target returns. 

Using a platform like BondMason to align and work alongside a self-managed P2P lending portfolio can help cope with the rising volume and complexity of opportunities within the P2P Lending market. This market boasted £3.2bn of lending in 2016  (up 39%) with still plenty of room for growth. With changes in platform prominence and regulation stepping up, this is a dynamic backdrop by which to manage your finances. Support in management of an element of your portfolio can provide cut-through in your busy day.

*Warning: nothing in this article should be construed as advice.  Your capital is at risk

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