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Most investors not expecting to beat cash, says peer-to-peer lender

By Ryan Weeks on 5th June 2017


New RateSetter research reveals startlingly low expectations among retail investors.


Major peer-to-peer lender RateSetter has unveiled the findings of a new survey of 2,000 people, of whom more than 500 invest their money via products like equities, bonds or peer-to-peer loans. The findings suggest that most of these investors expect their portfolios to be outperformed by cash over the next 12 months.


The average return on cash currently stands at a meagre 0.15 per cent, according to Bank of England data. This means that cash products deliver a real-terms loss to savers, considering the prevailing inflation rate of 2.7 per cent. This raw deal for savers is a point that RateSetter has laboured time and again, in the hope of positioning peer-to-peer investments as a more sensible alternative.


RateSetter’s head of investor operations Ceri Williams said it was “startling” to see such low expectations of investment performance. He said that there is no reason that a balanced portfolio shouldn’t outperform cash by a healthy margin, while stressing the need for diversification.


“We’ve seen a steady increase in the number of individuals adding peer-to-peer loans to their investment portfolios which is not surprising in view of low returns from other assets,” he said.


The Liberum AltFi Returns Index currently shows a 12-month trailing net return of 4.93 per cent across the peer-to-peer lending sector’s biggest three platforms. RateSetter’s own return figure sits a little under the benchmark at 4.81 per cent.


Male investors are more bullish on their prospects than females, with 49 per cent expecting to beat cash, versus just 32 per cent of female investors. 18-34 year-old investors are the most confident age group, with 51 per cent believing they’ll beat cash. 25 per cent of the investors surveyed by RateSetter expect to see returns of over 10 per cent over the next 12 months.




07 Jun 2017 09:37am

Philippe, I think this means that investors that were in this survey don't know how to invest their money. You have to diversify but also take on a higher level of risk. To not be confident of beating a 0.15% return is a sad state of affairs.


06 Jun 2017 11:12am

does this mean they are willing to accept returns way below the risk adjusted rate of return. ie they will buy at prices where the expected return does not reflect the underlying risk.

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