A peer-to-peer lender has recently launched a trust intended to provide “returns competitive with bank hybrids” to its wholesale investors.
SocietyOne’s Personal Loans Unit Trust will invest in a diversified portfolio of the lender’s fixed rate unsecured personal loans and will provide both a more fluid option and a consistent monthly income stream to investors with a minimum application of $100,000.
CEO Mark Jones said, “We believe this new Unit Trust model will help to significantly simplify the experience of investing in our portfolio of personal loans, and provide investors with greater access to this asset class, consistent interest payments and enhanced liquidity options after 12 months.”
The target is $25m to $50m in assets under management in the first year of operations, with a return of 6% per annum after fees and costs, but before taxes. Additional proceeds above the targeted return are to be passed to investors as well.
“The Unit Trust was designed to provide investors with greater levels of simplicity, access, diversification, and liquidity, while delivering solid and consistent returns,” said chief investment officer John Cummins.
Investors can access their funds after 12 months, compared to the current fractionalised option which is fixed for the life of the loan, usually 36 to 60 months.
“The market has evolved, with investors now wanting a more simplified structure and means to invest in this asset class, rather than having to make many smaller investments in individual loans.
“This is an issue that the trust resolves, while simultaneously providing the same above-average returns,” Cummins concluded.