Funding Secure – 12 Month Results

12 month results

The first full year results for lending through Funding Secure are as follows –

Expected ROI (Annualised) 12.00%
Actual ROI (Annualised) 3.08%

The ‘Expected ROI’ figure is taken from the average headline figure across each of the loan parts held over the last 12 months. The ‘Actual ROI’ has come in significantly lower at 3.08%. Now the first thing to say is any platform that offers 12.00 – 16.00% potential returns is inherently high risk as the borrower would paying an interest rate of 20.00 – 30.00%. Part of the reason the return figure is so low is because I’ve chosen to withdraw most of the repayments given a slightly skewed figure based on remaining problematic loans. That said approximately 50.00% of the loans I lent against are gone overdue some of these are in default with little prospect for recovery. Most of the income has been generated by selling the loan parts early at a discount which has also applied downward pressure on returns.

Funding Secure boasts total lending of in excess of £290,000,000 up to the end of these 12 months, with active investors (which it calls members) in excess of of 5000.

Conclusion

So although it looks bad I’m still refining my approach to lending with Funding Secure and I think an improved strategy could deliver  more worthwhile returns. For now Funding Secure will remain active in my portfolio in measured way while I continue to experiment, but i’m under no illusions it will be one the highest risk platforms in my portfolio.

Lendy – 18 Month Results

18 month review

I have got to 18 months lending through the Lendy platform and the results are follows –

Expected ROI (Annualised) 11.50%
Actual ROI (Annualised) 2.39%

In my previous Lendy review ( Lendy Results – 12 Month ) I was quite critical of Lendy and made clear that if things did not improve that they would not continue within in my portfolio. I’m afraid things have not only not improved they have got considerably worse.

The ‘Expected ROI’ is taken from the average headline return of the loan parts I hold. The ‘Actual ROI’ is what was achieved over the previous 12 months and at 2.39% theres is clearly something seriously wrong with this picture. It should be repeated that I only hold a remnant of ‘bad/unsellable’ loans with Lendy so the the returns should naturally be underwhelming, that said all of remaining loan parts are overdue payment some approaching three years. Total recovery on these problem loans has been less than 1.00% of balance over the last six months, which is pitiful.

Lendy and approximately 5000 lenders are now also facing legal action via one particular borrower for substantial damages, this is a live legal action so i can not comment on the merits of the claim, but all I would say is nobody saw this coming or even considered this a possibility. Further to this it would appear Lendy have actively attempted to manipulate review sites by not only removing even slightly negative reviews within minutes of posting but also replacing them with very dubious positive reviews that read as if the poster has little internal knowledge of the platform (ie.possibly paid for reviews), unfortunately this can’t be proved unequivocally without access to internal databases, which of course will never happen, but I think the damage to integrity with the lender base who are aware of this situation, has already been done.

 

Conclusion

It’s looking very bleak for Lendy and it’s difficult to see how it will ever turn things around and rebuild trust with it’s lender base. Lendy unfortunately seem to have viewed it’s lender base with absolute contempt over the last 12 months. I have made the firm decision to no longer invest with Lendy and as a result all referral links with-in this blog have been removed. Even if Lendy miraculously recover the outstanding funds and return to a double digit projected annual return over the next 3 months there is no-way I will return (at least under current management) as their integrity, in my eyes at least has been destroyed. I will still continue to report on Lendy every 6 months while a balance remains outstanding but only in the capacity of a recovery.

Funding Circle – 18 Month Results

18 Month Results

The results for lending through Funding Circle over the past 18 months are as follows –

Expected ROI (Annualised) 7.20%
Actual ROI (Annualised) 8.23%

The ‘Expected ROI’ is taken from Funding Circles own marketing material. The ‘Actual ROI’ has come in significantly higher. The ‘Expected’ figure takes into account a predicted level of defaults, I only had one loan part in the 18 months ‘downgraded’. This meant the loan part in question issued a warning of possible problems with repayments, despite this the loan part still made and is continuing to make repayments, so I think I have lucky with my account performing above average, which explains why I’m currently running over 1.00% above Funding Circles own predictions. This of course is likely to change as loan holdings mature and the likelihood of missed repayments increases.

The other big news for Funding Circle in this 6 month period since the last results, is the conformation of it’s IPO. Due to launch in October 2018 this IPO is highly anticipated as being the first P2P company to IPO in the UK. Other IPOs for P2P companies have previously taken place on the other side of the pond with concerning results. Lending Club IPOd in 2014 with it’s share price dropping 30% within weeks, in now trades (09/2018) at a huge 85.00% discount on IPO price. A similar pattern is being expected by many financial analyst for Funding Circle.

To conclude Funding Circle is doing more than enough in both terms ‘Actual Returns’ and future prospects of continued returns to maintain its position as an integral part of my portfolio.

Portfolio Review – 2018

It’s been a mixed bag for my Investment Portfolio in 2018.

The losers

Collateral UK – announced it was entering administration in February 2018 following instruction by the UK regulator (FCA). It would appear Collateral UK were operating without the necessary regulatory permissions. The administration and wind up of this loan book continues at a frustrating slow pace. At this moment in time I’m still recording Collaterals balance within my portfolio as i am none the wiser on a possible recovery figure approaching 12 months after commencement of the administration. I have however revised any projected future (since February 2018) return on investment to zero. If recovery is anything close to zero it will put my overall portfolio at a serious loss.

Lendy – has had a really rough year with as much as 60.00% of it’s live loan book falling behind or in to default. This has given rise to an onslaught of lender anger towards the platform with many lenders choosing to withdraw all available balance and leave Lendy as a sore memory, including myself. This mass withdrawal has only exacerbated Lendy’s liquidity problem. Furthermore legal action is now under way by a borrower against approximately 5000 lenders and Lendy itself, a situation nobody predicted or even considered possible. This action has only further infuriated many lenders and is proving to be a further nail in the coffin for Lendy’s future. As well as this many Lenders decided to vent their frustrations via Trustpilot reviews only to have anything even slightly negative removed within minutes and replaced by what appeared to be entirely contrived and possibly paid for reviews, this further added fuel to the fire and ruined any integrity Lendy might have held with many lenders. Lendy attempted to end the year a note of humility by issuing a formal apology to all Lenders for the situation, I believe for the first time. However there may be a feeling of far too little too late, with a growing sentiment of not if Lendy go under but when. Obviously Lendy are no longer active within my portfolio going forward but I will continue to report every 6 months while funds remain outstanding on the platform.

Funding Secure – has also had problems with defaulting loans, dubious valuations, inadequate communication and poor levels of recovery. Now I’ve never really had the confidence in Funding Secure or received high enough returns to get significantly invested, so although I have reduced my holding to a handful of unsellable loan parts my return to date is not too bad and providing the remaining loan parts see some decent resolution over the next few months it’s possible Funding Secure may retain its place in my portfolio going forward, at least in a small way. I am however aware, and sympathetic of individuals who have been acutely and severely affected by losses thorough Funding Secure, so I remain unconvinced for now.

The stand out performers

Funding Circle – IPO’d back in October 2018 and it’s share price plummeted over the following weeks by as much as 45.00%. I have also heard of many bad experiences and criticisms particularly over a number of loans Funding Circle issued that subsequently defaulted prior to even a first repayment. To date I have only recently gained my 2nd downgraded (problematic/defaulting) loan part which makes up a small proportion of my overall return, in fact my rate of return for 2018 ended a little north of 8.50%. Funding Circle remained unprofitable in 2018 and no doubt the sizable drop in share price hurt a little but as a result of the IPO Funding Circle should be well funded for the next year and I would hope they return to a profit and reduce the need for an extensive market budget in 2019.

Money Thing – out performed any other platform with a return of over 10.00% in 2018. This is partly down to a few loans offering cash back and subsequently not filling or being relaunched meaning cashback was earned without the long term commitment of principle. Moneything has been one the fairest platforms in my experience in dealing with lenders in 2018, reaching out to it’s lender base for recommendations on how to get sizable loan offerings filled and actively engaging in feedback on how better to deliver it’s platform to the market. For me it’s still relatively early days on the platform and I’m yet to realise a default whereas others with much longer experiences of Moneything have and suffered sizable losses as a result. For that reason I don’t expect 2019 to deliver quite as impressive returns, but right now I really rate Moneything.

We Lend Us – soft launched in December 2017 and from nothing has grown it’s loan book to over £1.5 million by the end of 2018, made up of maximum loans of just £500. We Lend Us only offer short term, payday style loans so it’s offering is inherently risky coupled with it’s infancy so I’m still progressing very cautiously. That said with a 2018 return over 8.00% I can’t, not consider We Lend Us as standout performer. I have had some specific issues with communication but I can put that down to early day growing pains and I don’t see it as a major concern. For 2019 I’m expecting a further improved return as well as the platform maturing in to sizable force with in the short term lending P2P sector.

Unbolted – again delivering north of 8.00% in 2018 has to be considered a stand out performer. I would describe Unbolted as ‘a quite grafter’, it gets the job done as expected without much fuss, other than that there’s not really much more to say. I’m anticipating more of the same in 2019.

Ablrate –  is the newest of the standout performers in 2018 reaching over 8.00%  projected annual return on investment in just 8 months. It could be higher if I chose to utilise the secondary market place to buy up more discounted loan parts. Ablerate as a company seem to be a well run outfit able to attract a higher caliber of loan offeringing than some platforms. Again it’s still early days for me on Ablrate so I’m yet to experience any major issues with my loan holdings, although I have had late payments the speed (usually within a few weeks) these issues were resolved puts most other platforms to shame.

 

My outlook for 2019

Possible portfolio additions

I constantly look to strengthen and evolve my portfolio and one way of doing this is by adding new P2P platforms to the portfolio. I currently have 47 platforms (mostly P2P) listed at various stages of due diligence and review. 10 of these are short listed and maybe added in 2019. These include –

Propify – A UK property development loan P2P specialist that utilises blockchain technology, due to launch in early 2019 (I’m a minor shareholder).

Landlordinvest – A UK rental equality P2P platform with returns of up to 12.00% pa.

Kuflink – A UK short term P2P loan specialist dealing mainly with property, returns of 7.20% pa.

Relendex – A UK commercial property P2P lender, returns up to 10.00% pa.

Crowdstacker – A UK business P2P lender, returns up to 7.50% pa.

Lending Crowd – A UK business P2P lender, returns up to 6.00% pa.

Thincats – A UK business P2P lender, returns of up to 7.50% pa.

Crowdproperty –  A UK property specialist P2P lender, returns of up to 8.00% pa.

Crowd to Fund – A UK business P2P lender, returns up to 8.70% pa.

Linked Finance – An Irish business specialist P2P lender, returns up to 12.00% pa.

Expectations for my portfolio. 

As my portfolio continues to mature and I weed out under performers I would like to see a further stabilisation of monthly returns but with a backdrop of consistent growth in 2019. Although I managed growth in every month of 2018 a couple of months were very close to the wire. I’m fully anticipating one or two P2P platforms to call it a day or be forced to call it a day in 2019 for which I hope I am sufficiently positioned to not be too acutely affected.

The year ahead for the P2P industry.

For the P2P sector specifically, despite early signs of a movement of high street banks back in to the ‘risker’ areas of lending that P2P now operate in. I think P2P will continue to grow on a loyal lender base that high street banks have shunned for the last decade with negative interest rates (considering inflation). The stronger P2P platforms will thrive while the less well run will fold to increased competition. A longer term prediction in to 2020/2021 is we could well see acquisitions of P2P platforms by not only other P2P platforms but also established high street banks as they look consolide the competition.

There has been some talk of a tightening of regulation in the P2P sector, while I think further regulation is inevitable I think it’s a little late in day to see any major changes take effect in 2019, although we may see some more detailed proposals take shape.

I would say the most likely P2P platform to IPO next (out of those I review) would be Landbay, possibly within the next 3 years.

The UK Economy as a whole

I think the overriding theme for the economy as a whole will be uncertainty, while Brexit remains outstanding. The Bank Of England will seek to increase the base rate if the economy allows it. There may be a slight cooling (I think a 30% drop is ludicrous) of house prices across the country while persistent uncertainty encourages potential buyers to sit on their hands. I think London will be hit harder by a cooling in house prices because it has further to fall. I actively try to avoid investing in London because of this.

I think stock markets will continue to fall in both the US and the UK for the first quarter of 2019, with a possible stabilisation around mid 2019. I sold out of my stock funds some months ago but I’m anticipating a re-entry into a UK index tracker for around April 2019.

Finally

I started this blogg two years ago with little more intention of compiling a written record of my journey in to P2P lending, made public so as to introduce P2P and relevant various platforms to individuals who are quite frankly fed up of getting a raw deal from complacent high street banks offering negative returns (considering inflation) on their hard earned and saved money. I have been truly humbled with how this blog has grown in reach over the last 12 months with no formal marketing spend, visitors have increased by 70.00% year on a year while views have increased by an unbelievable 200.00%.

So I sincerely thank you for your unexpected but greatly appreciated support over these last two years and I will continue to review platforms, and report my experiences as frankly and honestly as I am able to. I wish you all a prosperous 2019 and may we all continue to grow for the better.

Assetz Capital – An Introduction

Introduction

Assetz Capital is a P2P lending platform offering both property and business loan opportunities. Founded in 2012 it’s total lending to date is now in excess of £350 million. The minimum deposit for Assetz is £10 with a minimum loan part of £0.01. Deposits are made by bank transfer only and usually clear within 3 business days. Loan terms are generally between 12 and 60 months.

 

Assetz offers 5 different accounts to customers

Property Secured Account (PSA) – Target rate of return 5.50% per annum, monies secured against a fund of UK based property loans. Monies are auto-assigned and withdrawal is only available on the condition of a buyer being available at the time.

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30-Day Access Account (30DAA) – Target rate of return 5.10% per annum, monies are auto assigned to both business and property loans but require 30 days notice for a withdrawal dependant on market conditions. This account is also backed by a discretionary provision fund.

screen shot 2019-01-05 at 20.02.08

 

Quick Access Account (QAA) – Target rate of return 4.10% per annum, monies are withdrawable (to your cash account) immediately depending on market conditions. Funds are lent against both UK business and property loans.

screen shot 2019-01-05 at 20.02.15

 

Great British Business Account (GBBA) – Target rate of return 6.25% per annum, monies are auto-invested exclusively in to British Business loans. This account is also backed by a discretionary provision fund, withdrawal times can vary widely dependent on market conditions.

screen shot 2019-01-05 at 20.02.23

 

Manual Lending Account (MLA) – Available rate of return up to 10.00% per annum, this is a traditional self select account, you choose the deal you want to lend to and how much you want to lend. Loans are available to both UK business and property.

screen shot 2019-01-05 at 20.07.03

 

The Assetz accounts also offer a ‘Cash Sweep’ function. This means you set any usassinged monies to be swept in to the ‘Quick Access Account’ earning the target rate of 4.10% per annum while you wait for repaid funds to build before making a new investment using the funds from the QAA,  minimising cash drag.

Assetz are also authorised to offer an IFISA option meaning £20’000 can be invested a year tax free. Assetz Capital are fully regulated by the FCA.

Unbolted – 6 Month Results

6 Month Results

The first half year results for lending through the Unbolted platform are as follows  –

Expected ROI (Annualised) 7.20%
Actual ROI (Annualised) 8.90%

The ‘Expected ROI’ is taken from the Unbolted website. The ‘Actual ROI’ at 8.90% is obviously significantly higher than expected. This is for one main reason the ‘Expected’ takes in to account a sensible level of defaults whereas the ‘Actual’ is taken from the ‘Interest Earned and Accrued’ figure in the account. Now some people factor in a predicted default rate in to a portfolio, I’m not personally a fan of this technique as a requires a crystal ball and it can quickly become very confusing and complicated subtracting and then later adding figures to a rolling portfolio. So I view the Unbolted figure with a certain degree of reduced expectation.

Unbolted chooses not to publish up to date statistics so it’s difficult to know how the loan book is doing in terms of growth, but with a £5.00 minimum loan part allowing for easy diversification I’ve had no problems with new funds being assigned (with-in a few days) over the last 6 months. A note of caution though, Unbolted has a very narrow borrower clientele, indeed many of the loans are provided against chatel to a single action house. So the true diversification level can be a little opaque with Unbolted, something to consider when working out your own risk appetite.

In conclusion I’m happy with my Unbolted experience so far. Unblotted seems to run a tight ship with decent quality loans following a rigorous due diligence process. Although no defaults have been realised in my first 6 months I do expect this to change over the coming months as defaults are always to be expected when lending.

Bricklane – 12 Month Results

12 Month Results

The first year results for investing through Bricklane are as follows –

Expected ROI (Annualised) 5.00%
Actual ROI (Annualised) 1.51%

It’s a little difficult to set an Expected ROI with Bricklane as it has a 2.00% deposit fee, meaning if you deposit a large volume in sort time you will end up with negative return so I have taken 5.00% Expected ROI form their own marketing material.

My Actual ROI is 1.51% for the year for exactly the reason explained above, this is for the Regional Capital Fund only as I do not participate in the London Fund.  The underlying growth (excluding deposit fee) is actually around the 7.00% mark. Of course you can argue Bricklane is not strictly P2P as it’s actually an REIT but I value its place for diversification within my portfolio and it dose meet several of the traditional P2P definitions.

It has been a good year for Bricklane with sustained growth in both rental income and property prices, with properties being added to fund at a reasonable pace : Regional Fund Property value c£9,000,000, London Fund Property value c£4,500,000.  However I’ll be closing out 2018 and going in to 2019 with moderated expectations as many in the property industry are predicting minimal growth or even a small retraction in house prices in 2019.

In conclusion I will continue to add to funds to Bricklane over the next year with a degree of caution and hope for an improved outcome over expectations. I view Bricklane as a longer term investment, over ten years, so sort term returns at this stage are less relevant that other P2P platforms.