Traditionally the role of fixeddavid beacham income within a portfolio was to protect investors from the volatility of equities and provide income to protect against inflationary pressures – writes David Beacham, Head of Distribution, Goji


Traditional portfolio theory rests on the maxim of ‘normal’ interest rates. But with bonds delivering historically low yields and the expectation that global rates will increase slowly over the next decade, this doesn’t provide the most attractive backdrop for fixed income investors.

Over the coming years we think that investing in alternative credit and Direct Lending will become a substantial asset class for investors, and lots of evidence shows this is already starting to happen. Plus, the introduction of the IFISA will only increase demand.

Since the Global Financial Crisis there have been major forces at play that have opened up a new Direct Lending asset class for investors.

Firstly, globally, regulators have imposed capital requirements on traditional banks to ensure that the reckless lending habits undertaken pre-2008 won’t happen again. That’s meant banks’ balance sheets have shrunk as they have retreated from mass lending.

Secondly, as technology has developed, market disruptors – via the use of big data – have the ability to source potential borrowers where before that was the privy of large banks with significant distribution networks.

Investors can now earn a steady return from assets that have been traditionally reserved for banks’ who have been able to leverage their ‘captive’ banking relationships (i.e. current accounts) to extend credit to borrowers. Thanks to new technology-enabled lending platforms, investors now have the ability to access this exciting new asset class and earn a premium for investing in traditionally illiquid credit assets – platforms enable investors to invest in a diversified manner in order to minimise the risk posed by a single borrower. Investment platforms, such as Goji, enhance this opportunity further by sourcing credit assets from across loan classes to optimise an investors portfolio and provide additional liquidity and risk management as well as provide a series of tax wrappers to enhance returns further.

At Goji we believe that this new asset class should be considered as a small component of a clients’ overall wealth solution. To what degree and how much depends on individual circumstances. We believe that as investors and advisors, it is important to fully understand the asset classes that make up the Direct Lending/Alternative Credit landscape.

Goji launched a term based Diversified Lending Product into the intermediary market in March 2017, to find out more please email us at or visit our website


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