P2P Global Investments fund looks to Europe over the US

The alternative credit focused fund is undergoing a period of transition in both asset mix and geography.

The alternative credit focused fund is undergoing a period of transition in both asset mix and geography.​

The £806m P2P Global Investments fund is pivoting more and more to European debt exposure at the expense of US consumer loans.

It’s latest half-yearly report states it’s largest exposure is still US consumer loans from the likes of Lending Club, although this has shifted from more than 55 per cent of the portfolio at the beginning of the year to just 39.3 per cent today.

Exposure to European assets including consumer, SME and property debt has leaped up to more than 40 per cent from 22 per cent last year. 

“[We] believe that both collateral performance and the cost of funding remain more attractive in Europe than in the US. Moreover, during the quarter the cost to hedge USD against GBP further increased as the rate differential between the two currencies widened,” the investment manager MW Eaglewood said in a statement. 

“Attractive risk-adjusted yields in both liquid and illiquid credit remain scarce. During the quarter, spreads in the fixed income market have again tightened. Gross yields in UK unsecured consumer loans have further declined, as the competition remains fierce. This suggests that there will be less income to absorb potential future losses. In light of this, the Investment Manager has been increasing exposure to secured loans and products with an asset backed structure it added.”

The investment manager will continue to originate loans with the larger P2P platforms that have a 'proven track record' and subsequently enhance returns using securitisations.