Marketplace Loans And Institutional Investors: A Match Made in Heaven?

September 19, 2019

In this issue of Marketplace Insights, we focus on the dynamics driving institutional investors to marketplace loans. As the marketplace lending industry continues to develop, institutional investors are increasing their allocations to it, putting billions of dollars to work in the sector.

Why are institutional investors interested in marketplace loans and how are they accessing them?

The marketplace loan industry has experienced rapid growth since its inception 12 years ago, powering the emergence of consumer credit as an investable asset class. Growth has been most dramatic with institutional investors. These investors say they are trying to gain diversification benefits and enhanced yields, as well as taking advantage of marketplace loans’ reduced sensitivity to interest rates versus some other types of credit investments.

Greenwich Associates’ 2018 study on institutional investors and marketplace loans found broad institutional investor participation across borrower segments and products: from auto to medical purchase loans. We interviewed a cross-section of investor types to see how they compared to those Greenwich Associates surveyed. Among other things, we discussed their:

  • Decision to allocate funds to marketplace loans;
  • experiences to date;
  • and the role the investment category plays in their overall portfolios.

Those we spoke to showed confidence in how their investments have played out, and satisfaction with their investment platform(s). They also shared why they find investing with LendingClub compelling: namely, our scale as the leading industry player, wealth of consumer data, and marketing strength.

Read the full Marketplace Insights piece here.


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