How peer-to-peer stacks up

Image of a sample asset allocation chart

Investing through the peer-to-peer lending marketplace means you gain exposure to consumer credit, which is the debt of another person, a borrower. Organizations that provide the opportunity to gain investment exposure to consumer credit are called marketplace lending platforms.

While you’re likely familiar with consumer credit as a borrower through using credit cards or taking out loans, you may not be familiar with it as an investment option as it’s only recently been made available to individual investors.

Understanding where consumer credit stacks up in comparison to traditional asset classes like stocks and bonds is key to deciding how it may fit within your overall investment portfolio. Reference the chart below for some high-level comparisons between the asset classes.

Since you may be considering adding consumer credit investment exposure to your overall asset allocation strategy, if you invest in LendingClub Notes, make sure to review the prospectus.

Asset class comparison between LendingClub Notes, stocks, and bonds.

Consumer credit can be a portfolio diversifier

The investment universe is no exception to the rule that the only constant is change. What once worked to create a diversified portfolio may not work now, and what works now may not work in the future. For example, before the Great Recession, nearly every major asset class was less correlated to the performance of the S&P 500. Since then, many factors, like globalization, have contributed to asset classes becoming more correlated, making it more difficult to effectively diversify and protect your capital.*

Historically, consumer credit has not been as correlated to other major asset classes and is, therefore, another potential diversification tool you may consider adding to your overall investment portfolio.*

Correlation chart of major asset classes to the S&P 500

Certain asset classes have become more correlated over time, making effective diversification difficult.

Time and dollars invested—how marketplace lending returns compare

The chart below* summarizes a historical look at how marketplace lending has historically delivered a competitive return while investors’ capital was tied up for a shorter time period as compared with other major fixed-income instruments.

Along with other factors, taking your personal investment time horizon into account is an important consideration.

Chart dsiplaying the total return and weighted average maturity of multiple fixed income securities

Now that you understand how this relatively new asset class compares to others, can be a diversification mechanism, and how consumer credit fits within the broader fixed income space, learn more about gaining investment exposure to consumer credit through LendingClub Notes.