Downing Crowd Says IFISAs Now Make Up 30% of All Investments

Downing Crowd is reporting that since the March launch of their Innovative Finance ISA (IFISA), these savings vehicles make up 30% of Downing Crowd investments. Downing Crowd says it has seen a rapid rise in business from IFISA customers, just one year after HM Treasury passed legislation to extend the IFISA to include Crowd Bonds in addition to peer-to-peer loans. Downing Crowd is a crowdfunding platform that allows investors to participate in “Crowd Bonds” – a debt instrument.

Julia Groves, Downing Partner and Head of Crowdfunding, expects the popularity of their IFISA to continue not just with existing members but with a potentially wider pool of investors too – particularly in light of the recent interest rate rise which many banks have refused to pass onto savers, despite the fact that overall rates are still dismally low. Groves says figures from trade body UK Finance show £1.5 billion was pulled from cash ISAs in October this year, as investors seek out better returns for their money.

“Against this backdrop, it’s the potential returns that can really set the IFISA apart,” says Groves. “Downing Crowd Bonds have, to date, achieved an average weighted interest rate of 5.72%. Provided that investors and savers are happy to take on the higher risk that comes with investing in Crowd Bonds, the IFISA could create some very exciting prospects for UK investors compared to the current low interest rates offered by many cash ISAs.” Please note that an IFISA is not the same as a cash ISA and your capital is at risk and is not protected by the Financial Services Compensation Scheme (FSCS) deposit scheme. Crowd Bonds are non-readily realisable and returns are not guaranteed.”

Groves adds that recent numbers by the Office for Budget Responsibility (OBR) show a disappointing degree of update – £20 milllion versus the £800 million expected.

“ … we believe this is largely due to the fact that some of the biggest platforms have still to launch their IFISAs,” shares Groves. “Meanwhile our own figures, gathered just eight months since our IFISA launch, suggest savers are becoming increasingly interested in the tax wrapper. A potential lack of understanding among investors could explain why different types of crowdfunding are lumped together and labelled as being “too risky”. But we believe that Downing Crowd Bonds are actually a very simple form of lending that is, in many ways, less complex and less risky than both equity investing and peer-to-peer lending”.

Groves explains that her platform’s Crowd Bonds offer a small number of larger scale investments allowing them to perform higher levels of due diligence and disclosure. She believes this may be contrasted with P2P Loans where the due diligence may not be as profound.

The Downing Crowd platform was launched in March 2016. As at October 2017, the platform had raised almost £40 million on behalf of small UK businesses, having successfully launched 19 Bonds and repaid more than £16 million capital. Downing Crowd is part of Downing LLP, an FCA authorised and regulated investment manager with over 25 years of experience, more than 35,000 investors and in excess of £950 million of funds under management. Downing has 891 investors as of the end of October 2017, of which 269 have opened IFISA accounts.

 

Sponsored Links by DQ Promote

Send this to a friend