Marketplace lending looks ahead to the next downturn

The niche is one of most exciting new areas for private debt investments, but its short track record leaves investors guessing as to how it will fare in the event of a credit crunch.

Institutional investors love finding new niches that allow them to access new types of return, thus enabling them to diversify their risks. Marketplace lending, also known as peer-to-peer lending, is one that has recently piqued the interest of many.

“There are a lot of niche strategies in private debt that are starting to interest clients, looking to expand out of their base private debt portfolio and diversify over time,” says Garvan McCarthy, a principal in the Dublin office of consultancy Mercer.

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