Marketplace Lending

 

Making returns from consumer and small business lending

Consumer and small business lending, two of the most profitable parts of banking, have been disrupted by marketplace lending platforms that match borrowers with investors looking to fund prime credit.

Global Credit Investments (GCI) is an Australian fixed-income fund manager investing in loans made through the global marketplace lending sector.

The GCI Diversified Income Fund aims to comprise the best loans from the best of these platforms. It's calibrated for high income and low volatility — perfect for the fixed-income component of a well-balanced portfolio.

 
 

What makes it so effective?

 

Consumers and small businesses apply for loans

In marketplace lending, a consumer or small business applies for a loan online through a technology platform instead of going to a bank. 

There are many of these platforms offering prime credit. GCI has performed extensive due diligence on the majority of these platforms determining which to acquire from. 

Loans range in size from $1,000 to $500,000, but the typical size is in the region of $14,000. Mass diversification is a key risk mitigation tool.

 

Assessing the risk

The marketplace lending platform applies traditional credit underwriting techniques then another layer of analysis that’s possible in the social media age. They rank successful applicants by creditworthiness and set an interest rate accordingly.

Approved loans are advertised to investors through the platform. Investors choose specific loans to fund at rates set by the platform to reflect the risk of the borrower in each case.

 

Taking the top 1%

The well established marketplace lending platforms typically approve only 5-10% of loans.

Once the platform has approved a loan and made it available, we apply our proprietary algorithm to the available loans to narrow the field even further. This way we aim to bring only the best loans into our fund.

 
 

We know which marketplace lending platforms are doing the best job of assessing credit risk. And we know how to choose the most valuable loans from those platforms. Investing in the GCI Diversified Income Fund gives you access to that expertise and spreads your risk over thousands of loans and multiple platforms.

 

Diversified portfolio

Globally it’s recognised that 15-50% of a portfolio should be allocated to fixed income investments. In Australia, we tend to hold far less. A GCI fund will help you balance your portfolio by adding exposure to credit and fixed income assets.

Expertise

There are many marketplace lending platforms globally through which you could directly fund loans. However, they vary widely in quality. We have done extensive research and only work with those with established track records and stable return history.

 

Continuous learning

We are investing at scale, and our systems are set up to give continuous feedback. Our algorithm for selecting loans is being tested and refined all the time over a large number of loans. That human and machine learning isn’t available to everyday investors going directly to the platform.

Further refinement

We take the loans approved by the marketplace lending platforms and apply our own quantitative analysis and modelling to them. The platforms choose only the best risks from their pool of loan applications. We cut the list down even further.

 
 
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Diversified risk within the fund

By accessing consumer, small business lending ans short-term mortgages through a fund, you are spreading your investment over multiple platforms and multiple loans chosen by experts in the market.

 

Want to know how it works?

Sign up for an investment pack.

 

Or give us a call

+61 (2) 9230 0850
contact@globalcreditinvestments.com