UK-based peer-to-peer lender RateSetter recently announced its ISA has exceeded expectations in its first year, having attracted £175 million of subscriptions, and currently accounts for one-fifth of the platform’s £830 million funds under management. RateSetter unveiled its ISA in February 2018. It allows investments in peer-to-peer loans to be included in a tax-free ISA wrapper up to an investor’s £20,000 annual ISA allowance.
RateSetter reported almost one-quarter of its investors have opened an ISA with 16,500 people currently enjoying their returns tax-free within the ISA wrapper. The online lending platform then revealed that in contrast to all other mainstream investments which fell in value last year, investments with RateSetter shared it has continued to generate steady returns averaging an annualized 4.5% throughout 2018. Speaking about the ISA milestone, Mario Lupori, Chief Investments Officer at RateSetter, stated:
“We have always been confident that investing with RateSetter delivers excellent value and that the tax-free ISA wrapper makes investing more attractive still – but we have been blown away by the popularity of the RateSetter ISA in its first year! With even the best Cash ISAs barely matching inflation and the volatility of Stocks & Shares testing investors’ nerves, the healthy and steady performance of the RateSetter ISA makes it stand out. 2019 could be the year that we see the Innovative Finance ISA really take off.”
RateSetter went on to explain that to do every individual investor has received all the capital and interest that they expected thanks to the Provision Fund which spreads each investor’s risk across the whole loan portfolio and provides a buffer against poorly performing loans. The lender added:
“In total, more than 600,000 customers have used RateSetter to invest or borrow, making it the UK’s most popular peer-to-peer lender. RateSetter recently announced it had passed the milestone of originating more than £3 billion of loans since launch.”