Investors are constantly faced with the fear of losing their money while making any investment decisions. The P2P financing industry is still at early growth stage in Malaysia but, globally, the industry has seen its fair share of defaults, write-offs and even platform closures especially in the more matured and larger markets such as the USA and recently China.
Fundaztic.com (Fundaztic), one of the leading peer-2- peer (P2P) financial platform, has introduced Principal Protect, an assurance to investors that they will not incur capital losses if investments are made per simple conditions set. This important move makes Fundaztic, the first and only P2P platform to offer capital protection of their own.
Principal Protect is able to enhance the investor trust and confidence of the Notes hosted by Fundaztic by ensuring that investors are not adversely affected and their investments are protected at all times as it compensates investors for the loss on principal amount incurred on the defaulted Notes or write-offs within portfolios made up of 100 Notes each.
“P2P financing in Malaysia started just 2 years ago and is at its infancy. Hence, there is a pertinent need to provide added assurance for active members to further drive growth through TRUST. The industry being regulated by the Securities Commission (SC) since day one, already brings about a strong level of trust but we need to elevate this further as we grow,” said Jeffrey Chew, Chairman of Peoplender Sdn Bhd which fully owns and runs
During the launch, Kristine Ng, Chief Executive Officer, explained that, “Principal Protect does not require members to sign-up or opt-in. It is automatically provided as soon as the member meets simple conditions set. These conditions comprise of what we have been advocating all these while and that is to build a portfolio of at least 100 Notes, in as short a time as possible through diversification into all Note types issued and investing in almost equal amount to manage risks involved.”
“Therefore, as long as a member has invested in at least 100 Notes and in amounts that do not deviate more than 3 times from the average amount invested per Note, the investor automatically enjoys Principal Protect.”
The feature is designed to provide an automatic reimbursement of sum lost on a monthly basis of up to RM30,000 against defaults and write-offs. This will give investors the desired confidence on the platform besides driving continuous investments that will in turn benefit more MSMEs hosted by the platform.
“We are committed to offer our investors protection on their capital and also give them the ease of mind knowing very well that at the very least, their investment capital will not be lost as long as they invest adhering to the criteria set to automatically enjoy Principal Protect. Fundaztic is proud to be the first P2P financing platform to provide protection and guarantee on a portfolio basis,” Ng said.
P2P has proven to be a successful financial platform that has attracted the government’s interest. This is evident through its decision during the National Budget 2019 to set-up a coinvestment fund and invest in P2P financing platforms.
“This move is a testament of the government recognising the strength of P2P financing. The government, as investors, would then earn returns and be able to reinvest in other MSMEs on a continuous basis This will then lead to more MSMEs gaining access to funding in a faster way,” added Ng.
The mechanism of Principle Protect is in tandem with Fundaztic’s brand promise to continuously innovate to enhance the value proposition and make funding and investment journey stress-free.
Fundaztic is founded by a group of prominent ex-bankers and a lawyer. It is a company with a paid-up capital of RM15.5 million and other principal shareholders include Mezzanine Ventures Sdn Bhd which is held 100% by Amcorp Capital Markets Sdn Bhd, which in turn is a wholly owned subsidiary of Amcorp Group Berhad.