It’s been a mixed bag for my Investment Portfolio in 2018.
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 Obviously Lendy are no longer active within my portfolio going forward but I will continue to report every 6 months while funds remain outstanding on the platform.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.
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.