Debt investment firms see growth of 493 per cent over decade

DEBT investment companies have seen growth of 493 per cent over the last decade and now represent £9.1bn in total assets, according to the Association of Investment Companies (AIC). The total – which is across 31 companies in three sectors of Debt – Direct Lending, Debt – Loans and Bonds, and Debt – Structured Finance – marks a rise from £1.5m in total managed assets in July 2009, the trade body’s report added. Debt investment companies offer high income during a period of ultra-low interest rates thanks to using a range of methods including peer-to-peer loans, but also come with higher risks and rewards than mainstream bonds. “Debt has been one of the fastest growing areas of the investment company industry,” said Annabel Brodie-Smith, communications director of the AIC. “Investors seeking income have been attracted by the generous yields achieved through a wide range of different strategies including corporate, asset-backed, distressed and P2P loans. “Many of these strategies are based on hard-to-trade assets and can only work within the closed-ended structure of investment companies, where these assets can be held without the risk of suspensions or forced sales.”