P2P has “attractive” risk reward ratio
Peer-to-peer lending has an “attractive” risk reward ratio in the current high-inflation environment, one platform boss has said.
Paul Sonabend, executive chairman of Relendex, said that with inflation edging higher, investors cannot afford to sit on cash. While equities and bonds are experiencing volatility at the moment, P2P lending can offer steady returns that can even beat the rate of inflation.
“We are living through a risk off period,” said Sonabend.
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“Investors are nursing serious losses in many asset classes. Equities are down, bond holders face substantial losses and alternative assets such as crypto are tanking.
“However, the natural response to sit on cash is simply not an answer. With inflation running at 10 per cent or more, holding cash means a certain loss in real terms, so it is important for investors to look for products that provide steady returns with lower risk profiles.”
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Sonabend added that while some forms of lending have become riskier in the current climate, Relendex – like most P2P lenders – only lends against assets which have real underlying value and which have been proven to consistently bounce back after every recession.
“Add in our conservative lending criteria and the personal and other guarantees provided by borrowers and the result is a risk reward ratio that is proving to be attractive in the new high inflation environment,” he said.
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