Loan notes: high returns, higher risks
18th July 2025
Loan notes have been making headlines recently for all the wrong reasons. A number of high-profile loan note failures have resulted in substantial financial losses for investors. While these products may promise tempting returns, at Brigantia we deliberately steer clear of them. and for good reason.
A loan note typically involves lending money to a business or venture in return for regular interest payments and eventual repayment of your capital. On the surface, this might seem straightforward, even appealing, with advertised returns frequently hitting double digits. Unfortunately, the reality can be very different.
We've recently observed the failure of a significant UK property loan note, and it’s far from an isolated incident. I’m frequently approached by distributors pitching loan notes with underlying investments as varied as litigation funding, whisky, fine art, and even energy companies in Sierra Leone. The common thread? High returns and astronomical commissions for advisers - often as high as 10–15%.
The fundamental issue is risk versus reward. At Brigantia, our approach is distinctly risk-averse, particularly because we’re entrusted with protecting and growing the wealth of our clients over decades, not just quarters. The attraction of loan notes lies in their seemingly exceptional returns, but these returns always come paired with substantial, often hidden risks. Many loan notes lack sufficient transparency, regulatory oversight, and independent oversight, making due diligence challenging if not impossible.
We've recently observed the failure of a significant UK property loan note, and it’s far from an isolated incident. I’m frequently approached by distributors pitching loan notes with underlying investments as varied as litigation funding, whisky, fine art, and even energy companies in Sierra Leone. The common thread? High returns and astronomical commissions for advisers - often as high as 10–15%.
The fundamental issue is risk versus reward. At Brigantia, our approach is distinctly risk-averse, particularly because we’re entrusted with protecting and growing the wealth of our clients over decades, not just quarters. The attraction of loan notes lies in their seemingly exceptional returns, but these returns always come paired with substantial, often hidden risks. Many loan notes lack sufficient transparency, regulatory oversight, and independent oversight, making due diligence challenging if not impossible.
Contrast this with carefully selected structured products, which we do use at Brigantia. Good structured products are backed by major international banks and clearly defined, regulated underlying investments. They typically involve large market indices or established individual stocks, transparently positioned as higher-risk investments where appropriate. Crucially, they also avoid the opaque, illiquid, and speculative nature common in loan notes.
Clients occasionally ask me, "How do Brigantia’s returns stack up against other wealth managers?" My response is always the same: that's the wrong question. What truly matters is how returns compare over meaningful periods - 15 or 20 years - not just one or two standout years inflated by risk-heavy bets. Anyone can temporarily boost performance by chasing higher-risk strategies, but eventually, these tend to implode, often disastrously.
At Brigantia, we're unashamedly conservative with client funds. Boring, even. We firmly believe that genuine wealth accumulation over the long term comes from disciplined investment strategies, consistency, and compounding modest but reliable returns, not from chasing the latest investment fad or dubious, high-risk ventures.
Ultimately, our responsibility is to ensure our clients sleep soundly at night, confident their investments are both secure and sensibly managed. High-commission loan notes, with their enticing yet perilous promises, simply don't align with that mission.
Clients occasionally ask me, "How do Brigantia’s returns stack up against other wealth managers?" My response is always the same: that's the wrong question. What truly matters is how returns compare over meaningful periods - 15 or 20 years - not just one or two standout years inflated by risk-heavy bets. Anyone can temporarily boost performance by chasing higher-risk strategies, but eventually, these tend to implode, often disastrously.
At Brigantia, we're unashamedly conservative with client funds. Boring, even. We firmly believe that genuine wealth accumulation over the long term comes from disciplined investment strategies, consistency, and compounding modest but reliable returns, not from chasing the latest investment fad or dubious, high-risk ventures.
Ultimately, our responsibility is to ensure our clients sleep soundly at night, confident their investments are both secure and sensibly managed. High-commission loan notes, with their enticing yet perilous promises, simply don't align with that mission.