Of Special Interest


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18th June 2019

Fifth of UK investors looking to debt investment, new research reveals

FJP Investment has commissioned an independent survey among more than 950 UK investors, exploring their sentiment towards debt investment. It found that one in five UK investors is considering debt investment amidst low interest rates and Brexit uncertainty.

The survey found that while 9 per cent of them currently hold some form of debt investment, 20 per cent are considering this investment type within the 2019/20 financial year – this figure rises to 34 per cent among investors aged under 35.

Of the investors, 36 per cent said the low 0.75 per cent base interest rate makes debt investment an attractive option for the money they currently have in savings. Furthermore, 44 per cent said debt investments appeal to them as they can provide short-and medium-term returns at a time when they are reluctant to make long-term investments due to the political and economic uncertainty caused by Brexit.

However, the research revealed that investors’ main concern regarding debt investments is the ability of the borrower to repay the loan: 67 per cent of respondents said they are wary about this type of investment because of fears the recipient of the capital would default on their repayments.

Conversely, the survey found that in 30 per cent of investors believe the great strength of debt investments lies in the fact they deliver regular, pre-defined returns. Meanwhile, 35 per cent said they think debt investments are simpler than other asset classes because there are no complicated exit strategies to contend with.

Elsewhere the study illustrated the positive impact debt investment can have in providing much-needed capital to individuals or organisations that are unable to access it from institutional lenders: 40 per cent of UK investors said they consider debt investment a good means of supporting others to achieve specific financial goals.

Jamie Johnson, CEO and Founder of FJP Investment, commented on the results: “Debt investment has become more popular over recent years, yet many investors remain wary of it. Such concerns are perpetuated by investment providers not conducting thorough due diligence of potential borrowers to ensure the risk of defaulting is as low as possible.

“Debt investment presents many benefits, particularly amidst low interest rates and Brexit uncertainty, as our research shows. It can provide regular returns over several years, which will attract those keen to make their money work harder without committing to long-term investments.”

Key data points:
• 36 per cent consider debt investment as an attractive option for achieving higher returns for the money they have in savings, with interest rates lingering at just 0.75 per cent
• 44 per cent are focused on short-term investments due to the political and economic uncertainty caused by Brexit – this rises to 68 per cent among those aged under 35
• 20 per cent of UK investors are considering making a debt investment in the 2019/20 financial year – this figure rises to 34 per cent among 18-34 year olds
• 67 per cent of respondents said they remain wary of debt investment amidst fears that borrowers will not be able to make their repayments
• 30 per cent see the main strength of debt investment as its ability to deliver regular, fixed returns, while 35 per cent see it as a simpler form of investment without complications around exit strategies
• 40 per cent of investors see debt investment as a positive way of supporting UK businesses in need of capital but who are unable to turn to institutional lenders