Investors shell-shocked by the fallout from high inflation, rising interest rates and slowing economies and looking to alternative markets for portfolio diversification and attractive returns might want to consider a relatively young and little known asset class: direct small lending.
Portfolios of such loans to households in the US, Europe and potentially in Asia tend to be underpinned by low volatility and a relatively high coupon that helps absorb any losses. Other characteristics of the loans, typically taken out by creditworthy high-income earners to consolidate debt into a single, cheaper loan, include a 3-5 year maturity and repayment in 24 months.
Tonko Gast, founder and CEO of Dynamic Credit Group and portfolio manager, discusses the asset class with chief market strategist Daniel Morris on this Talking heads podcast.
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