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Going forward, Goji will not be issuing any further bonds in order to allow us to focus on our platform technology services. Our Diversified Lending Bond has outperformed our target net return of 5% on all matured bonds to date and performance in our live bonds is also currently above this target. If you have an investment with us we will manage it to maturity and the Investment Management team will continue to focus on outperforming our target return. Please contact us if you have any questions - you can access your account by logging in here

Can you afford to ignore the Innovative Finance ISA?

Posted date: 10 September, 2018 Author: David Beacham
Can you afford to ignore the Innovative Finance ISA?-Goji Direct Lending Investment Experts

After a big year, the Innovative Finance ISA is gaining real momentum

The Government introduced the IFISA in 2016 as a way for retail investors to invest tax efficiently in the Direct Lending sector via debt-based securities and peer to peer. For many it was a logical innovation bearing in mind the Government’s policy objectives of encouraging financial innovation, diversifying financing for the UK economy and UK SMEs and helping savers who are struggling to beat inflation.

Direct Lending was the world’s fastest growing asset class in 2017, but retail investors have lagged behind institutional investors who have invested $360bn into the sector by the end of 2017. The latest figures published by HMRC today show that retail investors are now embracing the sector and seeing it as a real alternative to cash and stocks and shares ISAs.

Over 31,000 IFISAs were opened in the last tax year, which brings the total number to 36,000. It’s still small fry compared to cash ISAs (7.8m ISAs) and stocks & shares (2.8m), but to see such rapid growth is surely a sign the IFISA offers real customer benefit at a time when other more established methods of growing investors’ wealth are suffering their own challenges. In fact, compared to its more established friends, the IFISA is doing very well. The amount subscribed in cash ISAs has actually fallen for the third year running, likely due to the poor rates of return offered to savers, especially when compared to the rate of inflation.

Savers who are frustrated with Cash ISA returns but aren’t ready for the risks associated with the stock market are finding the Innovative Finance ISA can be a useful alternative. And with so many new subscribers in the latest tax year, the majority who have done so without financial advice, advisers should ask themselves whether they can afford to ignore it.

Digging into the detail

1. Average ISA value

Stocks and Shares


     Innovative Finance ISA

£10,124       £5,114        £9,355


2. ISA transfers to IFISAs administered on Goji’s platform

Whilst HMRC doesn’t publish data on transfers, Goji’s data from the c.8000 accounts that Goji administers for a number of platforms, suggests the following indicative figures with regard to transfers

Type of ISA

    Percentage transfers

   Average value

Stocks and Shares       17.66%       £26,083.25
Cash       71.20%       £15,553.65
Innovative Finance       11.13%       £10,988.61


So what does this tell us?

Cash ISAs are still offering very low rates of return, and the recent interest rate rise did nothing to change this. (Funny how mortgage rates immediately rose though, isn’t it?) So investors are turning to the IFISA for low volatility income and additional diversification, as can be seen in the high percentage of transfers from cash ISAs. The market data suggests investors agree with what the industry has been saying for some time – that Direct Lending and the Innovative Finance ISA sits in between cash and equities when it comes to risk.

So what’s stopping you?

You may think this is an unregulated sector that isn’t really open to advice, but Goji and others like them offer a regulated product that can be advised on by any adviser with Investment permissions. Many people consider it to be a risky sector, but it doesn’t have to be. By diversifying loans across upwards of 1,000 loans and loan parts and across 8 different lending partners, Goji offers a truly diversified solution. We invest across multiple sectors including SME, property, further education and renewable energy and our rigorous due diligence process means we are constantly monitoring defaults and loan interest rates.

Goji Head of Distribution, David Beacham, says:

Here at Goji we’re focused on bringing advice to the Direct Lending sector. We want end clients to be able to achieve the advice they deserve, and our own surveys and analysis tell us this is beginning to happen, with more than 1,000 IFA firms now turning to the sector.  

Andrea Sutcliffe, of Adviser Firm ABS Financial Planning, says:

Goji’s Direct Lending Bonds offer our clients a conservative, risk-managed and diversified approach to growing their money, without the volatility of traditional markets. We recommend advisers take the time to understand the Innovative Finance ISA, along with the asset class, and see what it can do for their business and clients.