MoneyThing – An Introduction

Introduction

Moneything is a family owned , self funded, P2P business launched in 2015. Moneything are fully authorised under the FCA as a P2P lender. They provide a mix of loans across multiple sectors, but all loans are asset backed. Moneything offer risk based returns from 10-18% per annum. There is a £1 minimum deposit/minimum investment on the platform, all investments must be made in whole pounds. Moneything also operates a secondary market place should investors wish to exit a loan early, subject to buying demand. There are no charges for selling or buying on the secondary market.

Moneything has seen significant and sustained, year on year growth since its launch. Cumulative lending for 2016 was £99M, 2017 £269M, growth in every quarter. Interest earned has increased £141,874 in Q1 2016 to £886,005 in Q4 2017, an increase in all but one quarter. Moneything experienced it’s first defaults in 2017 (7.7% of total loan value) and is expecting further defaults in 2018. Defaults are part of P2P lending and should be expected in small amounts on any platform.

Moneything Loan Page

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Moneything loan page

Asset Details – a brief description of loan on offer.

Loan Value – total value of the loan being requested.

Asset Value – total value of the asset being loaned against.

LTV – loan to value of the asset being loan against.

Rate – the annualised investor return being offered on the loan.

Bidding Start – the date the loan opens for bids.

End Date – the date the loan term is due to end.

Available – the amount of remaining loan available for investment. If it’s highlighted in yellow there is an amount available on the primary market, if it’s highlighted in green, there is an amount available on the secondary market place.

Invested – is the current amount you have invested it that loan.

Drawn Down – the loan has been drawn down and is being utilised by the borrower.

 

Funding Circle – 12 Month Results

12 Month Results

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

Expected ROI 7.20%
Actual ROI 6.69%

Since the removal of the manual lending settings were introduced in September 2017, I have opted for the ‘Balanced’ portfolio which estimates a 6-7% annual return. The ‘Expected ROI’ shown as 7.2% is based on the internal account estimate taken from the loan parts I currently hold. So I would put the better than expected rate down to the fact i am probably holding loan parts at a slightly higher average return rate.

The ‘Actual ROI’ comes in at 6.69% for the year. This is still comfortably with in the 6-7% portfolio estimate but falls short of the specific account estimate. I put the sort fall down to primarily cash drag (awaiting for deposited funds to be assigned to loan parts).

I have experienced my first ‘Key Event’ on a loan part within the last 6 month’s. A ‘Key Event’ is the very first step on the long road to a possible default. When a ‘Key Event’ occurs trading is suspended on that loan part until the ‘Key Event’ is resolved.  Now, ‘Key Events’ can describe a number of things ; from a missed repayment to the company failing to obtain a proposed refinancing deal subject the Funding Circle loan ; or even a big drop in company profits. There is no point stressing or panicking about a ‘Key Event’ occurring with-in your portfolio as it part of the risk you are taking, plus there is nothing you can do about it once it has occurred, you are locked in for ride even if ultimately leads to a default.

This scenario epitomises the importance of ‘portfolio diversification’. If you have a well diversified and balanced portfolio you can out run small hits like this no problem. It’s just part of the game.

Funding Circle the company is still growing rapidly in the first half of 2018, on target to grow loan origination (by monetary value) by a further 50% year on year, circa £2.00B. Grow loan origination (by number of loans) by 40% circa 25000, all while returns for investors have remained consistent. Now it may come as a surprise, given that Funding Circle is by far the biggest player in the P2P market, that they are not actually profitable. They have been profitable in the past but have opted to invest for expansion for the last 2 years with the intention of returning to profitability in late 2018. This is to sure up their number 1 spot in the P2P market place.

Going forward Funding Circle has earned is its pretty secure placing in my portfolio, and is easily one my top regarded ‘unsecured’ asset classes based on results, not promises. Despite the companies lack of profitability i am very comfortable with the security and well being of Funding Circle as a company. I find no reason why not to continue expanding my investment within Funding Circle over the coming months.

Landbay Results – 12 Month

12 Month Results

The first year of investing through Landbay is up, and the results are as follows –

Expected ROI 3.68%
Actual ROI 3.28%

As you can see the the ‘expected ROI’ has dropped marginally. This is because most of the investment is in a fixed rate of 3.69% however this fund was closed a few months ago, with the the new fixed rate fund offering 3.49%, as the returns are reinvested in the new lower rate fund this is causing a downward pressure on returns.

What is less easy to explain is the increased deficit between ‘expected’ and ‘actual ROI’. It is true February is a shorter month which would have a marginal difference on the run rate of ROI at this time of year. The other factor that could be causing the gap to widen is a significant drop in demand. Now considering Landbay reserve the right to queue funds in times of exceptional demand for up to 6 weeks, something i witnessed early on in this fund (informed by a notification on the fund at the time) this is not something i have witnessed since. Along with this the time that monthly returns are queued for reinvestment seems to be increasing, sometimes as long as 2 weeks. This could be indicating a significant drop in demand for new investment.

Now the length of the queue for reinvestment should not have a negative impact on returns as Landbay is one of the few platforms that accrue returns on queued investments. Looking at the wider situation, Landbay is heavily London centric (55.01% Greater London) and average London house prices have fallen back 1.5 – 2% over the last 12 – 18 months , with predictions for 2018 seeing a further drop. This will no doubt cause some pressure on the Landbay portfolio but still does not fully explain the deficit. Fund roll up (first month not being a complete month) from my own strategy could also play a part, although this was not evident in the 6 month review. I have contacted Landbay for further clarification on the cause of the drop in return and will repot back as soon as i have a response.

As mentioned previously, the latest fixed rate fund is now at a lower 3.49%, this fund is also now based on 25 year mortgages (as of January 2018) rather than previously 10 year mortgages. This is not necessarily a problem as Landbay do offer sell out early options (dependant on a buyer being available) but it does indicate Landbay seem to be seeking increased stability.

As for Landbay‘s future within my portfolio, February 2018 has been the first month i have experienced an issue with the expected rate of return, of course i will look in to this further before drawing a definitive judgement. It has always been difficult to get exited by Landbay’s rate of returns (current 3% inflation) with not much more than 0.5% annual return in real terms. That said i still view Landbay as a foundation fund to a diversified portfolio, but it’s meagre returns are restricting me to keep Landbay as a  relatively minor player in the overall portfolio. One big plus for me staying with Landbay beyond the returns, is it’s substantial wealth of research on the UK property market, which has been invaluable in constructing pieces for this blog. Landbay’s place is safe in my portfolio for the time being.

Collateral UK announces administration.

The UK based P2P lender Collateral UK announced today (28/02/2018) it has formally entered administration. The platform was taken offline on Monday 26th of February 2018 with nothing more than a ‘server upgrade’ landing page in it’s place. As speculation grew on forums over the next few days, from the plausible to out right ridiculous, as to the cause of this suspension in trading, a letter from the administrator was finally released late this evening.

The administrators letter cites the reason for the administration as ‘ The Company was operating in the belief that it was authorised and regulated by the Financial Conduct Authority under interim permission. It has transpired that this is not the case and consequently the Company has ceased lending ‘.

It is still very early stages in proceedings but it would appear invested capital will be secured and wound down in an orderly manner. However it is yet been clarified what will happen to cash on account, what will happen to investments not yet drawn down, what will happen to this months interest due tomorrow morning and if or when the platform will go back online. If the platform does not go back live, many investors maybe left scratching their heads in obtaining exact and up to date figures of what they have on the platform. This could cause difficulties with capital claims or tax filling.

Emotions are still raw at this time and it would unwise to speculate further on how this situation came about in the first place. Undoubtedly more will be revealed over the coming days and i will update accordingly. However some comfort should be taken from the fact this is by no means the worst case scenario, if played out as purported investor losses should be minimal if any.

This is exactly why all investments carry risk.