Returns and Attribution from a Student-Managed Peer-to-Peer Loan Fund

Many business schools run equity-based student-managed funds. However, few extend that experiential learning opportunity to incorporate fixed-income assets. In this paper, we report the seven-year results from a unique student-managed fund of peer-to-peer (P2P) loans. The minimum investment in these loans is low enough to allow even the smallest schools to offer students opportunities for meaningful, ongoing credit analysis. Our results show that P2P returns can be high, that defaults are significant, and that active management can add value in this market. They also support our contention that the institutional money now swamping the market is making P2P lending less attractive for retail investors