Alternative investors must embrace peer-to-peer (P2P) platforms if they want to diversify their investments in the banking and financial sectors, according to a new survey published by the New York Hedge Fund Roundtable (NYHFR).

63% of the fund managers, allocators, risk management and trading workers, service providers and other industry participants surveyed said it was now “necessary” for alt investors to turn to low risk, high return online platforms due to increasingly stringent requirements from traditional outlets.

P2P lending is becoming increasingly popular with alternative asset managers, institutional investors and borrowers alike, with 17% of respondents revealing that they had invested in P2P lending platforms and loans.

When asked about the greatest growth potential within the P2P market during the coming years, 43% said that the fact it avoids direct default exposure is the most attractive factor, while 31% said securitised bundles of P2P loads provide the best value for money. A quarter also believe that taking direct positions in larger loans made to SMEs is the best course of action.

Meanwhile, 20% believe the P2P sector is now more appealing to investors than traditional institutions. The report said: “Not only has P2P lending become extremely popular among borrowers, but P2P loans and the platforms that make them have become equally popular among institutional and alternative investors.”

NYHFR President Timothy P. Selby added that “institutional investors cannot afford to ignore P2P lending platforms.” The NYHFR is a non-profit firm that focuses on promoting best practices and ethics in the alternative investment industry.