P2P has outperformed shares by 2pc over the past decade
Peer-to-peer lending has outperformed the stocks and shares market by approximately two per cent per year over the past ten years, new data has revealed.
According to ratings agency 4th Way, P2P has consistently beaten the stock market with no down years. P2P returns have beaten inflation almost every year, with just one exception. However, even during that year P2P investors earned twice as much as stock-market investors.
The average P2P investor has more than doubled their money in a decade, the data found.
Following a lengthy data collation process, 4th Way is preparing to publish sector-wide statistics for the first time.
The data will allow investors to directly compare the performance of P2P lending with other asset classes for the first time.
Read more: P2P market at risk of monopolisation and cyber attacks
“Now, we have sufficient data from a large enough number of important P2P lending providers to start accurately tracking performance,” said a 4th Way spokesperson.
“So we can begin to make a direct comparison to other asset classes, such as the stock market.”
4th Way suggested that the success of P2P lending is due to the fact that the money lending sector “is intrinsically more stable than owning shares in companies, because, as lenders with property security, investors usually get their money back first, whereas shareholders are usually the last to do so when things go wrong.”
Read more: 4th Way reveals extent of Trussonomics on UK P2P
The 4th Way data also found that the closure of platforms such as FundingSecure and Lendy “would have a surprisingly small impact on overall lending results” due to the interest that they had previously paid to their investors.
The full set of data will be revealed next week, but 4th Way has confirmed that the market has seen positive returns every year since the first P2P platform was founded in 2005. This compares with six down years for the stock market.
Read more: Property lending safer than equity investing, says 4th Way