Alternative Investments

Music copyrights, P2P loans under limelight as alternative investment options

Music copyrights and peer-to-peer (P2P) personal loans are emerging as new alternatives to stocks and cryptocurrencies as investors are looking for safe but high-yielding havens to offset traditional volatile investment vehicles heavily affected by external factors and economic events.

Music Cow, a platform for investing in K-pop songs, now commands 850,000 members and 300 billion won ($253.5 million) transactions on a cumulative basis, an explosive growth from late 2018 when it earned 1 billion won in cumulative transactions with less than 10,000 members since its launch.

The platform, which allows fans to buy shares to own partial copyrights to listed songs, has attracted growing interest from investors who seek for high but stable returns.

The average annual return that investors took from the platform from Jan 1, 2018 to Jun. 30, 2021 reached 35.86 percent, according to a report unveiled at a recent academic conference in Korea. That is way higher than returns from investment in domestic stocks (10.18 percent), overseas stocks (5.45 percent), and gold (11.09 percent) in the same period. The platform yield was also almost independent of confounding variables such as the Covid-19 impact and other market movements. It has a correlation coefficient of less than 0.1 with domestic stocks, foreign stocks, bonds, gold, or even the U.S. dollar, which means the yield from music copyright investments remains shielded from ups and downs of other asset yields, the report said.

A P2P loan investment is another portfolio element in the spotlight for its low correlation with traditional investment options and decent returns. The “crowd” lending, a type of financing that connects people willing to loan money with people or businesses that want to borrow money, offers investment opportunities in loans secured by credit. This model is known to have an annual return of 7 to 8 percent with a correlation coefficient of less than 0.2 with U.S. stocks, real estate, and bonds.

Lendit, a well-known P2P lending provider in Korea, has grown on the back of its high-yielding capacity. The company’s cumulative credit loans escalated fast, reaching 25.2 billion won in 2016, 157.7 billion won in 2018 and 253.1 billion won at the end of October 2021. In July, private equity fund H&Q Korea decided to invest 50.4 billion won in Lendit.

By Seo Jeong-won and Minu Kim

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]


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