Additional ratings and research coverage of Australia’s peer-to-peer (P2P) investments has been identified as an area needing more work, which in turn will provide SMSF trustees with better insights into whether to participate in these opportunities, an investment professional has said.
“What we’d love to see is more engagement from the ratings agencies,” La Trobe Financial chief investment officer Chris Andrews told selfmanagedsuper.
“SQM Research is rating P2P managers now and that’s very positive for the sector because these rating agencies bring a long history of discipline and assessing new offerings and manager capability.
“The P2P sector would be more enriched by more engagement by researchers and that, of course, would help open up the sector to new channels of distribution and growth.”
Andrews highlighted that ratings formed an important part of the P2P investing process for investors, given the renewed hype about fintech-type P2P managers entering the market.
“It’s about bringing greater transparency and an extra pair of eyes to scrutinise managers to assess whether or not they’re living up to their promises,” he said.
He revealed when it came to SMSF demand for P2P opportunities, La Trobe Financial was receiving flows from two key channels.
“We’ve had SMSF lenders and investors coming to us directly and we’ve had many coming to us through a financial adviser, which we’re really pleased to see,” he said.
“It’s fair to say the [SMSF profile] for a P2P lender and investor are retirees and those at the later stages of accumulation, but we do also have some younger investors in the mix who are getting involved in P2P.”
Commenting on the evolution of the P2P sector, he noted there has been a shift, of which lenders and investors needed to be wary.
“We’ve seen a few P2P lenders absorbed by banks and some of the more high-profile ones effectively become credit assessment platforms for some of the regional banks to access different borrowers,” he said.
“It’s not a good thing for investors or the sector if these managers don’t do the right thing by their investors, so it’s good to see we haven’t had any significant collapses so far, but we have seen an evolution of their business model.”