Invest In Downing Crowd Bonds Via Your SIPP

Downing

Downing Crowd Bonds allow you to lend money to businesses by investing in a bond (a simple debt instrument) in return for interest on the amount you lend, typically 3 per cent to 7 per cent per year.

Downing is a 30 year old investment manager with over £1 billion under management (as of 31 December 2017), with a strong track record in arranging tax-efficient products that have historically been sold via IFAs.

The Benefits Of Investing With Downing

In March 2016, Downing added a new product to its suite, by arranging and selling corporate bonds, issued by many of the companies it has been arranging finance for over their lifetimes.  These bonds typically come from industries such as renewable energy, the care home and leisure sectors and the majority are asset-backed offering a level of security.

Traditionally, corporate bonds are sold on an exchange and therefore would usually be the preserve of the institutional investor.  Now these bonds can be bought directly by the crowd, meaning that anyone can have access.

Downing has a track record of which it's proud and highly motivated to maintain.  The due diligence it uses to assess these products is the result of its experience gained over the last 30 years as an investment manager.  It has now arranged 25 of these bonds, with a combined total of nearly £60 million and no defaults*.

Downing Crowd Bonds are a great example of what financial technology seeks to achieve: democratise a financial product (traditionally only available to institutional investors) by aligning it with agile technology and compliance, thus allowing it to be invested in by the crowd.

Anyone holding a personal pension is well aware of the need for consistent returns that are uncorrelated from the stock market.  It is now possible to hold Downing bonds in your SIPP or SSAS, which offers you fixed interest.

The bonds offer rates anywhere between 3 per cent to 7 per cent per year.  They are normally secured against tangible business assets and offer loan-to-value ratios of 15 per cent to 71 per cent.  Where these bonds are secured, Downing acts as security trustee thus taking a debenture over the assets.

Downing Crowd Bonds are categorised by the Financial Conduct Authority as Non Readily Realisable Assets (NRRS) as they are not easily realisable.  They are technically transferable, but as no established secondary market exists, you should assume you will be holding the bond for the full term, and that your capital is at risk.

Discover More About Downing

Visit the Downing website for full details.

SIPP And SSAS Investing On Downing

To discover whether investing your SIPP or SSAS money in crowdfunding and peer-to-peer lending is appropriate for your circumstances, please complete all the fields of the form below.

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  • For example: Personal Pension with Legal & General; Final Salary Pension with British Telecom.
  • Typically, you'll need to have a fund value of at least £50,000 and better still, around £100,000 to cover the annual fees and to make it economic.
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* IMPORTANT INFORMATION ABOUT DOWNING: Please note, investor’s capital is at risk and returns are not guaranteed.  Past performance is not a reliable indicator of future results.  Downing LLP is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025).

Crowdfunding And Peer-To-Peer Risk Warning

When a platform has been assessed and approved by a SIPP or SSAS operator, this does not imply that any loan or investment opportunity is endorsed in any way. A SIPP or SSAS operator's due diligence review is limited to ensuring the processes and procedures of the platform are in line with both FCA and HMRC principles.  It's entirely your responsibility for carrying out your own due diligence on any loan or investment opportunity before agreeing to lend or invest your pension money on a platform. As a SIPP or SSAS operator will continually review platforms from a regulatory perspective, it's possible for a platform to become 'unapproved' if something changes.

With peer-to-peer lending, your capital is at risk if you lend to individuals and businesses.  You may lose some or all of the capital lent if the borrower defaults and is unable to meet its liabilities. Historic loan default rates are not necessarily indicative of future default rates.  In addition, lending is an illiquid investment, which means you may not be able to access the capital you lend for the duration of the loan period, even if the platform offers a secondary market.  Investing in any business involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Crowdfunding is generally targeted at investors who are sufficiently sophisticated to understand the risks and make their own investment decisions, based on their knowledge, experience and financial capacity. Neither crowdfunding nor peer-to-peer lending is covered by the Financial Services Compensation Scheme. The tax treatment of your investment is dependent on your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of crowdfunding investment or peer-to-peer lending, you should consult a suitably qualified independent financial adviser.

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