Growth Street – An Introduction

Introduction

Growth Street Exchange Limited (full name) is a UK based, business focused P2P lender launched in 2015. The minimum deposit and minimum loan part for Growth Street is £10, made via bank transfer only. Current advertised annual return is 5.3%.

How Growth Street works is interesting, once a deposit has cleared you place an order on the market for the deposit to be assigned to a loan (Growth Street is ‘black box’ in nature so it chose the loans for you although you can view more detail on a loan once it’s been assigned) . All loans however are on one month rolling contracts. This means your deposit plus interest is redeposited back to your account balance at the end of the month, to be re-instructed for lending on new loan. This effectively means a total account closure/withdrawal could be performed in as little as a one month. This potentially makes Growth Street one of the most liquid P2P offerings on the market to date. Worth noting this is excluding the effects of defaults, which would be ‘unsellable’.

Growth Street does not offer a secondary market place so you are tied in for at least the month of the contract.

Growth Street Summary Page

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Summary Page for Growth Street

Money On Loan – shows the total balance currently assigned to loans.

Money On Market – shows the any open orders awaiting loan part assignment.

Holding Account Balance – shows any funds not yet on loan or queued for lending, with a minimum loan part of £10, cash drag is a factor with Growth Street. These holding balance funds can be withdrawn at anytime.

Current Interest Accrued (Unpaid) – is the outstanding interest on live loan part that should be expected with-in the next four weeks.

Interest paid to date – is the total interest paid on the deposited balance excluding accrued interest.

To perform a total account withdrawal you will first need to turn off the ‘Reinvestment’ instruction, accessible from the top right dropdown menu on the main website.

Money Thing – 6 Month Results

6 Month Results

The first 6 month’s results of investing through the Money Thing platform are as follows –

Expected ROI 12.00%
Actual ROI 8.22%

I have calculated the ‘Expected ROI’ for this platform as an average between the stated rage of return, ’10-18%’ average being 14% and I have factored in the frequency of these returns level offerings, there is currently (1/09/2018) only one  18% offering out of 100 live loans so I have revised the average down to 12% accordingly.

As you can see the ‘Actual ROI’ is currently 8.22%. One of my loan holdings became ‘Non Performing’ in this period meaning the loan is either not paying interest as expected or at all . Cash drag is a factor too, a minimum of £1 buy in’s means you pretty much always have residual pennies on account, coupled with a relatively slow new loan generation (currently one about every 10 days), I’m actually quite happy with current ROI. There have been no other major platform developments to report at this time.

Conclusion

I have no reason to consider dropping Money Thing from my portfolio at this time, in fact based on ROI it’s currently one of my strongest performers. Loan generation could be quicker but at least they are assessing loan applications with adequate time and thoroughness.

We Lend Us – An Introduction

Introduction

We Lend Us specialises in short term, unsecured personal loans. Some may call it a payday loan company but unfortunately these days that term is so toxic it might not be helpful describing them in that way (but thats essentially what they do). The difference with We Lend Us is they utilise P2P investment and provide a potential return.

We Lend Us are fully regulated by the FCA through parent company PTP Funding Limited. We Lend Us only launched at the end of 2017 so its a very new company. They performed a number of successful Seeders campaigns pre-launch to fund the business venture. They are also a member of Level 39, Europes biggest Fintech accelerator. Unfortunately We Lend Us are so new there are no full year financials as of yet. Advertised rates of return vary from 5-15% based on risk appetite. Loans are borrowed to £500 maximum, with a repayment time of 1-3 months, however interest can be as high as 250% APR. This may be a lower rate than many competitors in the same space, but it’s still a very high cost of borrowing.

We Lend Us works in two stages, firstly you have to set how you want your deposit to be lent out. Clicking the modify button shown on the page below will open the ‘Investment Criteria’ window. The Auto-Mach setting will allow you to choose loans between 5-15% return, the higher the return the higher the risk. The Auto-Diversify setting allows you to stipulate the maximum (minimum being £10) you want to invest in a single loan, forcing funds to be diversified across multiple loans, potentially reducing risk of losses. The third setting is the Provision Fund setting, allowing you to define your tolerance of a late payment, from 7-30 days before We Lend Us step in and utilise the provision fund to reimburse the invested principle. Any expected interest is defaulted in this instance. (see below for more detail on the provision fund).

You can also assign any unassigned moneys to an investment fund. One quirk with We Lend Us is you can actually set up multiple funds based on different criteria with in the same account.  So once you have all the settings decided you click save and move on to the second part of the process, essentially sitting back and waiting for your funds to be assigned and start earning you a return. If you make a further deposit in to you account you will have to manually assign it to which ever fund and criteria you want to lend through.

Manage Investments page

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We Lend Us investment page 

The main page for We Lend Us is the Investment page and it’s as basic as it gets –

Balance – shows the total amount of monies on the We Lend Us Platform.

Total Earned – shows interest earned from successfully resolved loans.

Queued – any monies assigned to a fund but awaiting a loan.

Lent Out – shows the total of funds currently on loan.

Investment Portfolio –  summarises the chosen settings for the investment fund (the settings displayed on this example should not be viewed as a personal recommendation of what you should set your fund to for desired results. It is up to you to play around with settings and find what works for you).

Withdrawal History – shows any withdrawals made from the platform.

The Provision Fund

We Lend Us do operate a provision fund which as explained earlier with reimburse the invested principle when a loan passes your defined late payment tolerance period. Now in normal conditions any interest on that loan part would not be reimbursed to the lender, however We Lend Us are currently using a short term month by month rolling promotion while in soft launch which does in fact reimburse the otherwise forfeited interest. But it should be assumed that this will not last for ever. So the example shown is a £100 deposit but the further £1.37 is actually the reimbursement via the promotion which is why its not shown as earnings (this is highlighted on a further page on the platform, but the rest of the information is identical to what is show in the example).

 

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.

Bricklane – An Introduction

Introduction

Bricklane is an online ISA lending platform exclusively operating in the UK property market. Established in 2014 Bricklane aims to create ‘ a fairer property market’. Bricklane offers a unique product in this area as it offers a combination of 2 financial products in one. You earn a return on investment on both portfolio growth and rental income. Bricklane is partnered with Zoopla (the UK’s biggest estate agent) so is considered to be well backed and relatively safe.

There are two options on where to deposit your funds in Bricklane at this time. You can either deposit in to the ‘London Fund’ or the ‘Regional Capital’s Fund’. The minimum deposit for Bricklane is £100 but there is a 2% deposit levy, which I must say is a little on the high side. With the addition of an 0.85% annual account fee.

Payments can be made by debit card (usually instant) or bank transfer (2-3 working days. You can either make a one-off payment or set up a monthly payment. Bricklane is also an ISA account so the balance is tax-free up to £20’000 in a financial year, for UK residents.

Withdrawals can be made from the entire account balance at any time providing there is demand to buy your investments,  but it can take a couple of days to process.

 

The Account Page

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The Bricklane Account Summary Page

Summary – shows details of both funds combined

London – shows details of the London fund. Scroll down the page to view specific properties in the fund

Regional Capitals – shows details of the Regional Capital fund. Scroll down the page to view specific properties in the fund

In your account – shows the total balance of your Bricklane account (notice from a £100 deposit its taken away the 2% deposit charge).

Earnings – Shows your total earnings to date across both funds.

The earnings graph – Shows your earnings in graph form for each week.