2016-01-20
Investment Trusts are the New Fashion Trend in Alternative Finance
Alternative lending platforms can offer investors returns that outpace traditional assets like the stock market or bonds. But there’s another way to buy into the revolution that’s flying under the radar: alternative lending investment trusts. We’ll coin the acronym “ALIT” to keep it simple.
ALITs: A growing phenomenon
Several different types of ALITs have sprung up over the last couple of years, providing a more geographically diversified alternative to buying loans from individual platforms like Lending Club and Prosper. These trusts buy loans from platforms in the U.S., Europe and even Africa. This latest incarnation of alternative lending is rather new, and takes much of the work out of selecting and doing due diligence on the loans investors select. It’s the hassle-free pre-cooked ready meal of “buying debt.”
Getting to know the players
The first in the field, P2P Global Investments, was founded in London in 2014 and is now tradable on the London Stock Exchange with more than £500 million in assets under its control. P2P Global invests in loans on U.S. based platforms like Lending Club, Upstart and Prosper, and also lends through the U.K.’s Funding Circle, Zopa and RateSetter. The trust’s target return rates are between 5% and 15%. That same year, GLI Finance made the decision to switch its focus from collateralized loan obligations (CLOs) to the burgeoning opportunity of SME (small and mid-sized enterprise) finance platforms. The company even has its own Alternative Finance Manifesto, which implores governments to consider the benefits alternative financing provides to small businesses. GLI Finance’s Louise Beaumont warns against what could happen to entrepreneurs if alternative finance doesn’t continue to grow. “Failure to address issues of awareness and understanding means the alternative finance industry would fail to continue growing as it has, and...SMEs will not be able to access the finance they need, when they need it,” she wrote. This year, more so-called ALITs have joined the party. VPC Specialty Lending Investments (VPC) raised £200m in a funding round in March, while Ranger Direct Lending recently raised £135m. Both are also based in London.
Pros and cons
The aforementioned players package alternative loans for investors, ready vetted by an additional team of credit assessment experts. This provides a clear benefit: A second layer of risk assessment, along with measures already taken by the individual alternative lending platform. Of course, the downside of having a team of experts select your loan exposure is simple. You have less information on each party’s credit standing, and have less insight into the conditions of the loan like value and collateral levels. P2P Global, for example, barely makes a nod to transparency. The fund doesn’t publish the names of the platforms it sources loans from, or those in which it has bought equity.
Permitted secrecy and promised performance
This secrecy is for the moment permitted, because alternative lending has not yet attracted overt regulatory scrutiny. But this novelty in turn makes it hard to assess if trusts provide value for money and will continue to do so; they have a rather short track record that makes it difficult to project future performance. Still, for those willing to accept the lack of transparency, the projected yields of these funds are often higher than for your standard investment trust. P2P Global is going for annualized returns of 5% to 15% and a yearly dividend of 6% to 8% percent. VPC Specialty Lending targets a net total return of over 10% and a net dividend yield of 8% a year, while Ranger is aiming for dividends that yield 10% on its issue price.
Another risk: leverage
One final factor that could make trusts a higher-risk venture is the issuance of leverage. Trusts have written into their terms and conditions the right to use leverage – i.e. borrow money – to fund asset purchases, in addition to cash raised through funding rounds. Unfortunately, existing capital adequacy rules are not always comprehensive enough to guarantee they can provision for all investor losses in the event of multiple defaults. This is an issue that bears monitoring and is something that could face heavier regulatory scrutiny in the future.
Takeaway
Alternative finance is expanding at triple-digit growth rates, and naturally, investors want a way to get into a model that has the potential to return more than the S&P 500 in a given year. While there are clear risks and the so-called “ALIT” space is young, trusts provide another option outside of using individual alternative lending platforms.
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Even
Even Financial Adds Tally's Low-Interest Line of Credit to its Embedded Finance Marketplace
NEW YORK, NY, March 15, 2022 -- Even Financial ("Even"), the category-leading embedded finance marketplace and independently managed subsidiary of MoneyLion, Inc. (NYSE: ML), has announced a new partnership with Tally, a leading financial automation company, to include the company's low-interest credit offerings on its platform.
"Tally has built a powerful tech-enabled system to help people solve one of the biggest financial problems today: paying off credit card debt," said Phill Rosen, Founder and CEO of Even. "We're thrilled to welcome Tally's line of credit offerings to Even's unparalleled network of financial services providers."
Tally is designed to help its members pay off their debt faster and save them money on interest and late fees. Members can lower their monthly payment with Tally's lower-interest line of credit, if eligible. Typically, at least a 580 FICO score is needed. Tally's system is customized to save people as much money as possible.
"Americans today owe nearly $1 trillion in credit card debt. We know from our research that many want to pay down their debt but struggle to get started. That's where Tally comes in," said Jason Huynh, VP of Credit, Analytics & Operations at Tally. "Our system combines financial automation with a low-interest line of credit to give people the help they need to get on track to pay off their credit card debt for good. We're thrilled that our partnership with Even will allow Tally to help even more people."
The launch of Tally on the Even platform enables consumers to get matched with Tally's custom, low-interest line of credit accounts of up to $25,000 in just a few minutes. After getting matched, eligible consumers complete the process through the Tally app. There are no out-of-pocket costs.
Tally is the latest partner to join the Even marketplace, a growing network of over 400 financial services partners and 500 channel partners covering a breadth of financial services including loans, credit cards, mortgages, savings, and insurance products. Even's marketplace technology enables any company to add financial products to its business, with full compliance and security, at scale.
About Even Financial
Even digitally connects and matches consumers with real-time, personalized financial product recommendations from banks, insurance carriers, and fintech companies on mobile apps, websites, and other digital touchpoints through its marketplace technology. Even's infrastructure leverages machine learning and advanced data science to solve a significant pain point in financial services customer acquisition, seamlessly bridging financial services providers (such as SoFi) and channel partners (such as TransUnion) via its industry-leading API and embedded finance marketplaces. Even enables any company to add financial products to its business, with full compliance and security at scale. Even was named one of "America's Best Startup Employers'' by Forbes for 2021 and was named to the 2021 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world. Learn more at www.evenfinancial.com.
About Tally
Tally is a consumer financial tech company pioneering full-service financial automation to help people save money, pay down their debt and reach their goals sooner. Founded in 2015, the company built the first fully automated debt manager to help put billions of dollars back in people's pockets. In 2021, Tally was named to Fast Company's Most Innovative Companies list and to Quartz's Best Companies for Remote Workers. Previously, Tally made Forbes' Next Billion Dollar Startup list, Forbes' Fintech 50 list, and the app won Real Simple's Smart Money award. Learn more at meettally.com.
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HAVEN LIFE
Haven Life’s All-Digital Life Insurance Application Experience Launches on Even Financial’s Leading Life Insurance Search Engine
Even features the industry's largest multi-carrier, all-digital life insurance marketplace
New York, New York August 16, 2021Even Financial (Even), the leading search, comparison, and recommendation engine for financial services, has announced the launch of Haven Term and Haven Simple on its life insurance marketplace platform. Leveraging machine learning and advanced data science, Even solves a significant pain point in financial services customer acquisition by seamlessly bridging financial institutions and channel partners via its industry-leading API and embeddable solutions.
With the addition of Haven Term and Haven Simple, Even has further expanded its extensive network of premium life insurance offerings, strengthening its position as the industrys largest multi-carrier, all-digital life insurance marketplace. Haven Life, which offers Haven Term and Haven Simple, and is backed and wholly owned by Massachusetts Mutual Life Insurance Company (MassMutual), is known for its customer-centric approach and for its commitment to making life insurance more affordable and accessible. Haven Lifes term life insurance offerings will be available on Even properties and via its wholly owned subsidiary LeapLife.
"In these uncertain times, the majority of U.S. adults want the financial security of high-quality life insurance, but are often dissuaded by the complex application process and need to complete an in-person medical exam", said Phill Rosen, Founder and CEO of Even Financial. "Haven Life's groundbreaking, all-digital application experience brings tremendous accessibility and peace-of-mind to consumers. We're thrilled to welcome them to the Even platform."
The launch of Haven Term and Haven Simple on the Even platform enables consumers to get matched with medically underwritten term life insurance policies that they can apply for and, if approved, purchase instantly online. While most Haven Term applicants will need to take a medical exam, Haven Simple applicants do not. Haven Life's offerings expand the variety of life insurance options already available to consumers through Even's API.
"Haven Life is committed to meeting life insurance customers wherever they are — and often, it's where they are managing the rest of their financial life," said Wade Seward, Head of Distribution Strategy at Haven Life. "On the heels of introducing even more affordable pricing for the Haven Term product, our partnership with Even Financial allows us to marry that affordability with greater accessibility to offer comprehensive financial protection to shared clients with ease and efficiency.
Even entered the life insurance industry in 2020 through its acquisition of LeapLife, a leading insurtech and licenced life insurance agency. Since that acquisition, Even has worked with its large network of channel partners to make the process of getting personalized life insurance fast, easy, and accessible for consumers. In addition to Haven Term and Haven Simple, products offered by leading insurance companies including Lincoln Financial Group, Pacific Life, and Mutual of Omaha are available through LeapLife, Even's life insurance platform. Companies such as TransUnion and Lantern by SoFi rely on Even's embedded finance marketplaces to power 100% digital personalized life insurance policy quotes for their customers, with live agent support.
Even has continued its rapid growth trajectory in 2021 by reaching over $3 billion in consumer credit issued through its API and expanding its platform to over 800 partners. Earlier this year, Even was named one of "America's Best Startup Employers: by Forbes" for 2021 and placed in the Top 50 of the 2020 Deloitte Technology Fast 500, which recognizes the fastest growing tech companies in the world.
About Even Financial
Founded in 2014, Even Financial is a B2B fintech company that is transforming the way financial institutions find and connect with consumers. As the leading search, comparison, and recommendation engine for financial services, Even seamlessly bridges financial institutions (such as SoFi) and channel partners (such as TransUnion) via its simple yet robust API and embeddable solutions. Even turns any consumer touchpoint into a comprehensive financial services marketplace with full compliance and security at scale. The company is backed by leading financial services firms and VCs, including American Express Ventures, Canaan Partners, Citi Ventures, Fidelity's F-Prime Capital, Greatpoint Ventures, Goldman Sachs, LendingClub, and MassMutual Ventures. Learn more at www.evenfinancial.com.
About Haven Life Insurance Agency
Haven Life Insurance Agency, LLC (Haven Life) is re-thinking how people financially protect the ones they love. Haven Life is committed to delivering exceptional products, delightful purchasing experiences, and meaningful moments of service to the modern life insurance customer. Haven Term is a Term Life Insurance Policy (ICC21 Haven Term in certain states, including NC) issued by C.M. Life Insurance Company (C.M. Life), Enfield, CT 06082. In New York (DTC-NY), and California (DTC-CA), and other states, it is issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.
Policy and rider form numbers and features may vary by state and may not be available in all states. Haven Term is available through Haven Life Insurance Agency, LLC (Haven Life), whose agency license number in California is OK71922 and in Arkansas, 100139527. Both Haven Life and C.M. Life are wholly owned subsidiaries of MassMutual.
Please note that issuing the policy or paying its benefits depends on the applicant's insurability, based on their answers to the health questions in the application, and their truthfulness.
MassMutual and its subsidiaries C.M. Life Insurance Company and MML Bay State Life Insurance Company are rated by A.M. Best Company as A++ (Superior; Top category of 15). The rating is as of June 1, 2021 and is subject to change. MassMutual has received different ratings from other rating agencies.
Media Contact
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