Online lending is the most profitable asset class
Online lending is more profitable than stocks, bonds and real estate, according to new research from the Gillmore Centre for Financial Technology at Warwick Business School.
A new report titled ‘Gaining a Seat at the Table: Enhancing the Attractiveness of Online Lending for Institutional Investors’ found that online lending can deliver an average rate of return of 8.86 to 13.08 percent each year, which “significantly outperforms an equal-weight portfolio of loans”.
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Analysts noted that online lending could be the most profitable asset class, and is particularly suited to institutional investors. However, the report also warned that investors could “miss the boat” due to a lack of awareness and understanding of the asset class.
“Online lending is in danger of slipping by and costing institutional investors, in particular, a lot of money,” said Ram Gopal, director of the Gillmore Centre for Financial Technology at Warwick Business School.
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“Limited awareness of this emerging asset class and the accompanying lack of understanding in industry, coupled with stringent government regulations, has led to this high potential investment flying under the radar.”
Gopal added that online lending can have “a transformative impact on institutional investors and unlock business growth for many organisations”.
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