Review: My P2P Lending Portfolio May 2019

May 17, 2019January 13, 2020 wiseclerk 7 Comments

I covered my p2p lending portfolio periodically over the past 12 years in this blog. The following report is a snapshot on how it is composed right now (May 2019) and which strategy I will take for the next months. As you can see below I aim for a widespread diversification (over different platforms as well as geographically) of my p2p lending investments.

Mintos

Mintos* is my biggest position. I run a trading strategy on Mintos. Mintos gives my net annual return as 15.1%. Calculating it myself based on the deposits and withdrawals I get a XIRR value of 24.8%. The cause for the huge discrepancy is that Mintos does not account correctly for the cashback of the campaigns. I heavily traded, when Mogo ran a campaign. For example I invested in new Mogo loans that were offered with a 2% cashback on the primary market, nearly instantly sold them with 1.8% discount on the secondary market and pocketed the cashback. Rinse and repeat.

I am satisfied with the current degree of diversification over loan originators in my Mintos portfolio. The bulk of my investments is in loan terms between 3 and 30 months at interest rates ranging from 13% to 15%. The lower interest rate loans are usually only held temporary as part of my trading strategy.

For the coming month I plan to keep my Mintos* investment at roughly that amount, reinvesting the paid principal and interest.
New investors registering via this link at Mintos, get 1% cashback on amounts invested in the first 90 days. Mintos is currently not accepting UK investors.

Linked Finance

My second largest p2p investment is on Irish SME loan platform Linked Finance.

Diversification achieved is good. The majority of my loans have interest rates between 8% and 11%. Most loan terms are 2 or 3 years.

I “collected” 7 loans in default (double dip on the golf loan). But 5 of these had repaid more than half the principal before they want into the default state so the principal in default sums up to only 270 Euro. My self-calulated XIRR value is 6.4% if I totally write off the amounts in default and 7.1% if I assume that half the amount in default will be recovered. I plan to slightly increase my Linked Finance* portfolio in the next months. Linked Finance is not offering any cashback or bonus rewards for new investors.

Bondora

Bondora is my third largest and oldest (still running) p2p lending portfolio. I started in 2012. My self calculated XIRR value is 16.6%. A yield that high is not achievable nowadays anymore. My portfolio profited heavily from the first years when interest rates were typically 28% to 34%.

I am currently investing into Estonian A and B loans using these autoinvest settings. I have used these settings unchanged for 11 months now and it is running totally hands-off with no maintenance required.

On Bondora* I reinvest the bulk of my repayments and occasionaly withdraw some funds. New investors registering on Bondora using this link get a 5 Euro sign-up bonus.

Ratesetter Australia

Ratesetter Australia* is my fourth largest p2p investment and also one of my youngest. I started in August 2018. My XIRR value self calculated in AUD is 9,1% if I include the 75 AUD sign-up bonus and 7.4% if I do not include that.

My money is mostly invested on the Ratesetter 5 year market at an average rate of 9.2% (that is after fees but before withholding tax).

In the past months the interest rates have dropped considerably therefore I am parking some funds on the 1 month market or invest them on the 3 year market.

I am reinvesting all repayments at Ratesetter Australia. If rates go up again I plan to do that on the 5 year market, otherwise I’ll settle for the 3 year market. It is a little complicated to register as a non-resident, but I have described how I managed to sign up as a European here. New investors can earn a 75 AUD promotion bonus by investing 2,000 AUD or more in our 3 year Income or 5 year Income lending markets before 31st May 2019. Achieving that requirement in time will not be easy, even if you start directly.

Iuvo Group

The fifth largest position of my p2p portfolio is invested at Iuvo. It is running hands-off and does not require any maintenance.

I continue to reinvest all repayments. Iuvo pays new investors a very generous cashback of up to 90 EUR. For more details and how to get it see the cashback overview page.

Estateguru

After I completely exited Lendy in last autumn, baltic Estateguru* is now my largest platform for property secured loans. I don’t use the autoinvest. Instead I periodically login and manually invest into a new Estonian loan secured by a first rank mortgage.

I mostly reinvest all repayments. New investors get 0.5% cashback for all investments in the first 90 days, if they sign up using this link.

Fellow Finance

I used to have a larger portfolio at finnish Fellow Finance but I did not want to go below 12% for 4 star Finnish consumer loans therefore I started withdrawing funds last year. In January the sale price collections paid tor Finnish loans dropped from 70% to 53% which reinforced my decision to exit.

October

I am running down my portfolio on French SME loan marketplace October. With the low interest rates and rising defaults (6 out of 52 loans) in my portfolio the risk reward ratio is not for my taste anymore.

New investors signing up on October using this link* can get 20 EUR bonus (200 Euro minimum investment)

More p2p lending marketplaces

Due to professional interest (want to gain first hand experience) and curiosity I have more p2p lending portfolios at Ablrate* (small, reinvesting), Assetz Capital* (tiny, reinvesting, possibly increasing), Bulkestate* (tiny, testing), Crowdestate* (small, reinvesting), Finbee* (tiny, nearly exited), Investly (small, reinvesting), Lenndy* (tiny, watching), Monestro, (tiny, exiting), Moneything* (small, exiting), Neofinance* (small, testing, probably running down), Reinvest24* (small, testing), Robocash* (small, reinvesting), Zlty Melon* (tiny, exiting next month when terms are up).

Crowdinvesting

Not p2p lending but investing in startups. I am a huge fan of Seedrs*. Investing in startups is of course even higher risk than investing in p2p lending. Nevertheless I went ahead and built a big Seedrs portfolio over the last years. Snapshot:

P2P Conference Riga

I am looking forward to be at the P2P Conference in Riga* which is less than 4 weeks away. The conference is reasonably priced (enter promotional code P2PEARLYBIRD40 for 40% rebate) and Riga can be reached with cheap flights from many European cities. BTW, Riga is an interesting town, if you have not been there yet you could combine the conference with some sightseeing.

Bondora Website Now Available in 24 Language to Boost Pan-European Usage

January 7, 2019January 13, 2020 wiseclerk 2 Comments

Bondora* has announced that the p2p lending marketplace platform is now accessible in 24 European languages. Bondora says it already has more than 42,000 investors from 85+ countries worldwide, that have invested more than 150 million EUR in the consumer loans listed on the Bondora marketplace. Bondora gives investors the choice of different investment products: Bondora Go&Grow, Portfolio Manager, Portfolio Pro and API Investment.

The popular Go&Grow product carries a yield of 6.75% and offers high liquidity.

Now the Bondora website can be used in 24 languages ranging from Bulgarian to Swedish. Bondora says they have taken this step, because they want to open their doors to Europe and make the platform accessible for all. Investors feel much more comfortable using a site which is in their native language.

Map of the local languages Bondora now supports

Want to start investing atÂ Bondora* now?

Use this link to sign up at Bondora*, and the normal signup bonus will be doubled for you, meaning, if you invest, you get 10 EUR bonus that you can use for investing. This is a limited time special promotion (after which the signup bonus will be 5 EUR again).

Bondora Go & Grow – Bondora Rolling Out New Product

May 14, 2018May 14, 2018 wiseclerk 3 Comments

Bondora has been rolling out a new product called Bondora Go & Grow to select users since March. It will be officially launched in June, but existing users can contact support and ask for the product to be made selectable in their accounts.

Go & Grow is designed for the passive investors as hands off p2p lending. One of the main advantages is that Bondora says it is tax optimised.

The Bondora Go & Grow product features a target interest rate of 6.75% which will accrue daily. It runs completly on autoinvest. The investor just needs to join it and pay money into the Go & Grow account (or transfer it from the normal Bondora account). The Go & Grow account promises daily liquidity. There is a 1 EUR withdrawal fee making small withdrawals expensive but for portfolios of 1000 EUR or more and usual investment horizons this fee is negligible.

How does Bondora Go & Grow work?

Simplified it is an autoinvest tool where Bondora invests the deposited money in loans on the Bondora marketplace (the investor does not see the individual loans). The investor automatically sells any claims for repayments and interests from these loans to Bondora which in return agrees to pay the 6.75% interest to the investor. Note that the 6.75% are not guaranteed but Bondora is very confident (based on their over 10 years experience) that they can achieve this yield. So basically Bondora invests the money on the market’s interest rates which are higher than 6.75 and the results influenced by defaults, late payments and cash drag, but Bondora is confident they are higher than 6.75%. Bondora pays the 6.75% to the investor and uses the surplus as reserve, which will be kept separate from Bondora’s funds.

What does tax optimized mean?

Bondora mentions two advantages:

The product is net of any defaults. This can be advantageous for investors in countries where it is not possible to offset default losses againts interest earned for tax purposes.
Interest accrues and is only credited at (final) withdrawal. This delays the point in time where interest is taxable according to Bondora.

So is this better than the ‘traditional’ Bondora product?

In my opinion this product is only the better choice, if the investor really does not want to be bothered with making minimal choices the Portfolio Pro requires and some monitoring. As described Bondora invests the money in the very same loans that are available in the traditional product and expects a higher yield than 6.75%.

For that very same reason I would caution investors to carefully consider, if they do want to take up the offered option to sell out their existing ‘traditional’ portfolio when opening/funding aÂ Bondora Go & Grow account. I assume that investors are very likely better off keeping that portfolio than selling it to Bondora at the price Bondora offers. However for an investor that really wants to sell an exitsing portfolio completly this offers a way to cash out (edit: see reader comment below) as the cash is than in the Bondora Go & Grow account and can be withdrawn instantly.

One caveat of course is that according to the T&C the liquidity for Bondora Go & Grow is subject to market conditions and not guaranteed. It reads a bit like the ‘normal market conditions’ wording that Assetz Capital uses for its Quick Access Account.

A lively discussion on the advantages and risks of the new Bondora Go & Grow product is running on the German form with around 100 posts on the subject.

EDIT: An earlier version of the article contained wrong information and has been corrected.

Despite being in prelaunch (select investors only), Bondora Go & Grow already made up 5% of new investments in April (source Bondora blog)

My P2P Lending Investment Portfolio at Bondora is now 5 Years Old

November 22, 2017 wiseclerk 5 Comments

Wow, 5 years have passed since I first started to invest into p2p lending at Bondora in October 2012. I periodically review my experiences in this blog – you can read my last update here. Over the total time I did deposit 14,000 Euro and withdrew 17,800 Euro.Â So over time I withdrew more than I ever deposited, meaning 3,800 Euro realized profit. Even better: I still have 604 loans in my Bondora portfolio with an outstanding principal of 7,467 Euro at an average interest rate of 23.78%. Of these 2,746 Euro are in current loans, 778 Euro in overdue loans and 3,941 Euro in 60+ days overdue loans. Some of this very overdue loans do in fact make very regular monthly payments, albeit smaller than the planned payments in the original payment schedule – it will take much longer for the loan to be repaid. And of course many of my red loans are duds, which haven’t made a single repayment and it is unlikely any recovery will be achieved. There is 43 Euro cash in the account.

Bondora shows a net return of 19.0% for my portfolio. In my own calculations, using XIRR in Excel, assuming that 30% of my 60+days overdue and 15% of my overdue loans will not be recovered, my ROI calculations result in 17.2% return. Even if I assume total loss on all outstanding loans that are 60+days overdue my ROI calculation results in 15.6%

Let’s look how my remaining portfolio is distributed by several criteria

Chart 1: My portfolio by country; majority in Estonian loans, remainder in Finnish loans

Chart 2: My portfolio by rating: more than half of the amount in B and C rated loans, large portions also in A and D ratings

Current situation at Bondora

New investors cannot expect to achieve similar yields. Interest rates are much lower now than when I started and I achieved a portion of my profit by trading loans on the secondary market at premium.
If you want to start on theÂ Bondora p2p lending marketplace now, consider using the Portfolio Pro autoinvest set to Estonian loans only with AA to B (or C) credit grades. Maybe try some Finnish loans with better credit grades too.

Bondora originates roughly 3 million Euro new loans per month. There is no cash drag, usually available amounts get invested very fast.

Chart 3: Cumulative all time development of my portfolio by credit grades 2012-2017. Remember I only deposited 14,000 Euro. The high 76,698 Euro given as total investment is a result of reinvestments and active buying and selling of loans.

Post Brexit: Bondora Plans European Office in Germany Instead of London

October 24, 2016 wiseclerk 1 Comment

Estonian p2p lending marketplace Bondora will open a new European office in Germany, saying that post brexit London is no longer attractive as a Fintech hub. Bondora formerly planned to move to London but stopped the plan after the brexit vote. ‘There is too much uncertainty, the UK lost its attractiveness as a fintech hub’ explains Bondora CEO PÃ¤rtel Tomberg the decision. Now he has Berlin, Frankfurt and Munich on the short-list. The head office will stay in Tallinn

For the Bondora business model very good access to the European market is crucial says Tomberg. He sees uncertainty how long London might be able to provide this.

After informal tals with German regulator Bafin, Bondora CFO Rein Ojavere got a positive view on the perspective for fintechs in Germany: ‘German’s regulators open up more and more to innvations in the financial sector to attract fintechs and seminal start-ups.’. Continue reading →

Bondora Removes Primary Marketplace From User Interface

October 21, 2016October 21, 2016 wiseclerk 4 Comments

P2P lending marketplace Bondora announced that it will pull the primary marketplace from the user interface effective November 1st. This removes the chance for investors to manually invest on selected loans, leaving the options to either use the automated portfolio manager or to use the API.

Earlier this week Bondora provided this statistic showing that the majority of investments is done through the portfolio manager. This is another of the many changes the Bondora marketplace underwent in the past years.

The announcement email sent today, reads:

On November 1, 2016 we will remove the Primary Market view from the user interface.
What does this mean?
In recent months it has become clear that the Portfolio Manager offers greater efficiency through automation compared to manually investing. The increasing benefits of Portfolio Manager are the result of recent updates to the funding process, which optimize speed. Moving forward we will continue to focus efforts on further improving Portfolio Manager, Bondora API, Secondary Market and the reporting features available on the platform.
Why is Bondora removing the Primary Market from the user interface?
Bondora is removing the Primary Market from the UI because the speed of our popular automated option meets the investing and borrowing needs before manual investing can take effect. Our process improvements have created an environment where almost all loans are funded before they become visible in the UI. As a result, the Primary Market is most of the time empty.
This scarcity is due to the fact that when a loan enters the market it is open to bids for 10 minutes. After the 10 minutes expire the loan is closed. Our internal analysis and reporting shows that almost 100% of loans are funded within this brief window of time. Therefore, there is little reason to hold loans open any longer, as doing so would create unnecessary delays.
What should API users do?
Removing the primary market from the user interface does not change anything for Bondora API users. However, API users should review their settings for polling loans from primary market and reconfigure their settings to match the changes to the current funding process. We recommend that the polling of new loans be set to once a minute. Our API allows for speeds up to one query per second, however such rapid polling is also not recommended.

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