By Bob Belan, CEO and Gareth Thomas, CIO at Symple Loans
For many Australian investors, 2018 will be remembered as the year that put the brakes on strong gains across many of the major asset classes after a decade of positive returns.
The ASX 200 fell nearly 7% and continues its volatile ride off the back of a host of macro and geo-political issues. Australian residential property values declined 6.5% – the steepest annual fall in 15 years. The average cash deposit rate returned a meagre 1.9% and continues its downward trend. Commercial real estate values have also showed signs of pulling back while only the Australian Commonwealth Government Bonds Index bucked the trend, delivering a 4.5% annual return.
Annual Returns For Major Asset Classes Through 31 December
1 Vanguard – http://insights.vanguard.com.au/static/asset-class/app.html
It is widely accepted that asset allocation is the single most important factor in achieving optimal risk-adjusted returns. One strategy being used by some of the most sophisticated investment managers globally is the deployment of capital into alternative asset classes – specifically marketplace lending.
Marketplace loans are unique. They share some characteristics with both short maturity and high yield bonds but can also resemble a structured product, such as an asset-backed security (ABS). These investments produce strong and predictable yields even in times of significant market volatility which is why marketplace lending has attracted significant capital from the likes of Goldman Sachs, JPMorgan, Blackrock, Fortress, Jefferies etc in recent years.
In Australia however, this asset class has predominantly been limited to large retail banks deploying a mix of customer deposits and wholesale capital to fund their own personal loan businesses.Symple Loans intends to change this by democratising access to marketplace
lending – creating more opportunity for private and professional Australian investors to directly fund consumer loans sold through its digital platform.
Symple’s low-cost business model uses state-of-the-art lending technologies and underwriting techniques to offer credit-worthy Australian consumers lower cost personal loan interest rates (starting at 5.99%) while generating stable and attractive returns for high-net-worth investors, family offices and alternative investment funds through the various stages of the economic cycle. Forecasted yields will match and in some cases, exceed returns being generated by Australia’s best-performing diversified funds.
Asset Class Performance vs. Volatility Matrix (5yr Mean Return)2
2 S&P Down Jones Indices – spindices.com – January 2019
Only a few months in to 2019, we continue to see unpredictable market swings and much lower returns by historical standards. With private investors under pressure to reposition their portfolios and develop new strategies for what is anticipated to be a sustained period of market unpredictability, now is the time to start thinking about marketplace lending as an alternative asset class investment.
If you would like to discuss this further, please contact Symple Loans’ Chief Investment Officer, Gareth Thomas at email@example.com.