Q3 Investor Barometer Results

Q3 Investor Barometer Results

Economy

Economic pain – with more on the way, say investors

Assetz Capital investors are predicting the worst economic quarter of the year, according to the Q3 Investor Barometer. 

Last quarter, the peer-to-peer lending platform surveyed its 29,000-strong investor base. When asked ‘how will the economic situation impact you in the next three months’, only 9% thought it would be positive, while 40% thought it would be negative. 

This compares poorly to Q1 (13% positive, 36% negative) and Q2 (10% positive, 31% negative), as the potential future relationship models with the EU post-Brexit start to become clearer. 

Stuart Law, CEO at Assetz Capital said: “While the government may release statistics that claim the economy is in good health, our investors are not as bullish. In fact, with confidence fading in the government’s ability to secure a good Brexit deal, our investment community is expecting this quarter to be the worst of the year. 

“Until this uncertainty is lifted, we expect that conventional means of business investment will continue to stall, breeding further concern for the economy. Although peer-to-peer lending has inherent risks, it now represents the best opportunity for SMEs to secure growth capital, drive employment and give the economy a shot in the arm.”

 

Brexit

Brexit deal confidence plummets amongst investors

Investors are rapidly losing confidence in the government’s ability to secure a good Brexit deal, according to new data from Assetz Capital’s Q3 Investor Barometer. 

The peer-to-peer business lender carries out its Investor Barometer every quarter, a survey of its 29,000-strong investor community. 

The Investor Barometer has tracked Brexit sentiment since the start of 2018, and as the UK’s withdrawal gets closer, confidence of a positive outcome to the negotiations has dropped. In Q3, only 10% were ‘confident’ or ‘very confident’ of a good deal. This is down from 20% in Q2 and 21% in Q1. 

Conversely, the number ‘not confident’ or ‘not at all confident’ has continued to rise. The figure hit 90% in Q3, up from 80% in Q2 and 79% in Q1. 

The results follow warnings from The International Monetary Fund that a “no-deal” Brexit would lead to “substantial costs” for the UK economy. 

Stuart Law, CEO at Assetz Capital said: “Whatever optimism our investors had around the Brexit negotiations is slipping away. The view from the Assetz Capital community is that there’s significant economic pain on the horizon. 

“Post-withdrawal, it will be more important than ever that the whole alternative finance industry works hard to deliver for both investors and borrowers. It’s when the economy struggles that growth capital becomes even more scarce. Peer-to-peer lenders must stand up and support the country through this Brexit uncertainty.”

*BBC News, 17th September 2018: https://www.bbc.co.uk/news/business-45546785

 

Interest Rates

Bank of England rate rise won’t affect the economy, say investors

Assetz Capital investors claim that the Bank of England’s increased interest rate will have no impact on the economy in the near future, according to new data from the Q3 Investor Barometer. 

The peer-to-peer business lender surveys its 29,000-strong investor community every quarter to determine their thoughts and predictions for the health of the UK economy. 

The most recent Investor Barometer found that 63% of investors were in no doubt that the Bank of England’s rate rise from 0.5% to 0.75% would be a damp squib. 15% predicted a negative impact while just 22% thought it would be a positive for the economy. 

While the interest rate rise initially appeared to be a positive for savers, high-street banks were called out for quickly adding the additional 0.25% to relevant mortgages but not doing the same to their savings accounts*. Even if the additional interest is added, inflation is still outstripping average savings rates, meaning consumers are effectively losing money. 

Stuart Law, CEO at Assetz Capital said: “The cynical view is that an interest rate rise simply increases the banks’ profit margins, and it’s becoming difficult to argue against that. Our investors see that the main outcome will simply be higher mortgage rates – which isn’t going to deliver a huge positive economic impact. 

“We don’t claim that peer-to-peer lending is the answer to everything, but, for informed investors that understand the risk, we are able to provide attractive target returns – while giving SMEs much-needed access to finance. It is alternative approaches like this that will unlock economic growth – not insignificant rate rises.”  

*Daily Mail, 7th August 2018: http://www.dailymail.co.uk/news/article-6033197/Banks-FAILING-pass-rise-official-base-rate-charging-borrowers-more.html

 

ISA

IFISA established in investors’ ISA portfolio

Innovative Finance ISAs (IFISAs) make up 37% of the average Assetz Capital investor’s ISA portfolio, according to the company’s Q3 Investor Barometer. 

Stocks and Shares ISAs lead the way with a 44% share, but Cash ISAs are lagging behind – making up just 17% of the average ISA portfolio. The less mainstream Help to Buy and Lifetime ISAs are used very sparingly (1%). 

The peer-to-peer business lender carries out its Investor Barometer every quarter, a survey of its 29,000-strong investor community. 

The findings follow Q2’s results which showed that investors using Cash ISAs had dropped from 52% in Q1 to 37% in Q2, following the close of the traditional ‘ISA season’. 

Stuart Law, CEO at Assetz Capital said: “The IFISA has established itself as the option of choice for those who want fair target returns but without the volatility of the stock market. The Cash ISA, on the other hand, continues to fall out of favour.  

“I’d expect much of the 17% share in Cash ISAs to be made up of historical investments that are at risk of being transferred. We’ve seen over £20 million of completed or in-progress transfers thus far and that figure will no doubt rise in the months to come. 

“Investors in our platform are typically sophisticated and experienced – and understandably more likely to opt for IFISAs and Stocks and Shares ISAs – but our analysis points to a wider problem with the current Cash ISA market. There’s very little value to be had, so investors are voting with their feet.” 

Earlier this year, Assetz Capital announced that over £50 million had been invested into its IFISA since launch in December 2017. ISA investments now account for over 15% of all loans funded through the platform.

- October 17, 2018