We’d like to tell you about some exciting changes coming soon at VIAINVEST. After a long and thorough process, we are transitioning from claim rights to the new generation of investment products: asset-backed securities. While we are finalizing the last details, join us and take a look at what it can offer.
Brief History
For years VIAINVEST has enabled private investors and legal entities to access the non-banking lending sector through a simple process by offering investments in loans originating from the non-banking lender VIA SMS Group and its daughter companies.
While these investment types are attractive for investors from all over the EU, they do have one main drawback, namely, the lack of regulation in the field. As such, investors must rely solely on the platform and loan originator’s good standing, lacking regulatory protection and oversight, including investor compensation schemes. The good news: this is about to improve.
A New Generation of Investment Products
With the introduction of asset-backed securities, investors will now have a more secure, balanced, and convenient way to invest in loans. Asset-backed securities are financial instruments backed by a pool of loans. Several loans are pooled together to create a new investment product in a regulated environment.
Why Invest in Asset-Backed Securities?
Besides the stability offered by combining multiple loans into one, asset-backed securities represent a safer and more predictable outcome, as much like a typical bond, the income (interest) is realized at a fixed rate for a set amount of time until they mature. This allows investors to invest in a variety of income-producing assets without taking on the associated risks with a single-source loan.
Three main characteristics of asset-backed securities encompass the range of benefits they offer. We’ll explore each one in this section below.
Security
- By the provisions of the Investor Protection Law established under EU Directive 97/9/EC, investors are entitled to compensation in the amount of outstanding liabilities up to EUR 20 000.
- Investor funds are held in segregated accounts separate from the company’s funds and can only be used for executing investors’ orders. The primary purpose of segregated accounts is to ensure that investors’ funds will never be misappropriated.
- To ensure a safe investing experience, we will categorize investors and determine the suitability of investment service according to MiFID II. As such, all of our new and existing investors will be asked to verify their identity and take the Appropriateness Assessment questionnaire.
Convenience
- Start investing with as little as EUR 50. Invest in a few clicks and begin earning interest right away!
- Make informed investing decisions. Every investment is issued based on FCMC-approved prospectuses and final terms documents that contain all the information required to help you decide if you’d like to invest in the securities.
- Once asset-backed securities become available, any “auto-invest” strategies you have with us will be converted to make investments in new products. You do not need to take any action for auto-invest to continue running as before. Any rules applicable to asset-backed securities, such as total interest rate or portfolio size, will be preserved as set originally by you.
Balance
- You’ve surely heard the saying, “Don’t put all your eggs in one basket.” This principle has become one of the golden rules of investing. With asset-backed securities, you are not investing in a single loan; you are investing in a pool of loans. Therefore, if one of the ten loans pooled does not perform well for example, you’d still have nine loans performing perfectly, generating interest.
Taxation
- Income generated from investing in regulated financial instruments is subject to a withholding tax. As VIAINVEST is a licensed investment platform, we must deduct the withholding tax from private investors’ income from asset-backed securities within the platform. The current withholding tax rate is 20 percent of the interest income earned, but the good news is that this rate can be reduced down to 10 percent or even 0 percent for some countries by submitting a tax residency certificate, thanks to the tax treaties concluded with Latvia. Please note that withholding tax is applied only to the interest portion of the revenue, while principal repayments are not taxed.
With all the benefits outlined above combined with these low rates, we believe asset-backed securities offer the best and most secure product for our investors moving forward. As such, we will continue to inform you about the upcoming changes and exactly how asset-backed securities will work on the VIAINVEST platform, so stay tuned and don’t miss our upcoming newsletters!
