One of the biggest challenges investors face today is generating yield above the rate of inflation. The most obvious culprit is cash, with investors often sitting on large cash sums as they are unaware of or unused to alternative investments that may offer yields in excess of cash returns. Thanks to inflation, ultimately this means that these investors are losing buying power over time as inflation outpaces the interest being earned.
In today’s low interest rate environment and with the unpredictability of financial markets, many investors are looking at crowd bonds as part of their investment portfolios as a simple solution to combat this challenge. The alternative finance market is growing significantly, with direct lending in the UK worth £4.5 billion in 2017 (a 21% increase on 2016), and the global market forecast to be worth £500 billion by 2024.
Investors are starting to consider this type of investments for several reasons, including:
- Additional portfolio diversification.
- Generating an overall higher rate of return by risking a portion of their cash.
- Transfer a portion of their existing cash ISA’s and make their money work harder for them.
- Reduce portfolio risk by removing funds from volatile markets (including equity).
- Create additional income from an alternative source which is not linked to the financial markets.
This is by no means exhaustive, but what is certain is that interest in these assets is rising and with this growing appetite it is important that investors understand what each provider in the space is really offering.
Amberside Asset Lending Platform (ALP) gives investors the opportunity to invest in a range of fixed-rate, secured crowd bonds that provide finance specifically for infrastructure projects. Amberside ALP are an experienced manager who have advised/invested on infrastructure projects worth close to £5.5 billion. They have identified a significant gap in the market for financing high quality infrastructure projects with borrowers requiring less than £20 million.
Infrastructure investments tend to be more meaningful to investors too as they can understand them. Whether they are solar plants creating energy, a GP surgery paid for by the government or a hydroponic glasshouse selling tomatoes, they are understandable and provide a product or service that is needed, rather than some obscure piece of technology or financial engineering where the assets are something virtual and which isn’t quite as understandable for investors.
Crowd bonds pool investors’ capital together and then on-lend it to the end-borrowers. This means diversification is easier to achieve and all investors are exposed to the entire portfolio of loans within that bond. This is unlike traditional peer-to-peer lenders where investors funds will be allocated to the next loans available. It also allows ALP to offer a fixed rate return which doesn’t vary even if a borrower fails to pay their loan, provided the platform receives enough cash to repay investors from its portfolio of loans.
Investors can currently choose from four bonds. All of the bonds have different rates of return depending on how accessible and diversified the investors would like their bond to be. The term lengths range from a one-month access bond up to a bond with a maturity date of January 2022.
- Choice – investors can choose the bond that most suits their situation.
- Tax Efficient – investors can hold their bonds within the Amberside ISA thereby enjoying tax free returns for capital and income.
- Security – First or second charge taken over the borrower’s assets in every circumstance – 75% max LTV.
- Experienced management team – advised/invested on almost £5.5 billion of infrastructure projects.
- Zero losses to date, although past performance is no indicator of future performance.
- No development risk taken on any projects, although construction risk is often taken.
Please note capital is at risk and you may get back less than you invested.
Amberside ALP will be speaking on the Gallery Stage at our Master Investor 2019 event and will be set up at Stand 48. Please do go and speak with them to hear more about the fantastic investments they offer.
About Amberside Capital
Amberside ALP is a debt platform managed by an experienced team who have advised/invested on infrastructure projects worth close to £5.5 billion. They have recognised a gap in the market for financing high quality infrastructure projects with borrowers requiring less than £20 million, as this is poorly served by larger institutions. Amberside ALP offers a range of ISA qualifying infrastructure crowd bonds to investors with interest rates ranging between 3% and 8.5%. Typical projects include hydroponics, grid support, and solar site construction.
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