Boost for P2P as equities suffer
Investors are increasingly shifting their portfolios towards to peer-to-peer lending and other higher-risk investment options, and away from equities, in response to ongoing economic instability.
According to a new analysis from Croatia-based P2P platform Robocash, economic instability has caused investor portfolios to tilt in favour of P2P.
“In 2019, the volume of P2P platforms was growing smoothly while the stock market was falling,” said Robocash analysts.
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“With the onset of the pandemic, stocks began to rebound and P2P investments decreased.
“When investors reduce their P2P portfolio, they choose other assets such as securities.”
The analysts noted that a similar correlation has been spotted with the real estate market. European real estate transactions have ben in decline since mid-2018, while P2P investments have been rising, the analysts said.
“After the pandemic began, investors redirected their funds into more familiar markets like real estate,” the analysts added.
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“Such investor behaviour can also be guided by favourable events in the market, like falling prices for housing.”
Furthermore, Robocash found that before the pandemic, there was an inverse correlation between P2P investments and cryptocurrency. However, this correlation has shifted in recent years, suggesting that investors are bundling crypto and P2P into the same risk category.
“Investors are probably considering the same factors when reviewing their investments in P2P and cryptocurrencies, since both offer solid returns as alternative investments,” the analysts said.
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