ratesetter

How I Selected My Preferred P2P Lending Marketplaces – Part II

Guest 4 Comments

This is part II of a guest post by British investor ‘Pete’. Read part I first.

The number P2P / P2B platforms in the UK has increased quite quickly over the past few years and I have currently settled on 3 further UK platforms that suit my needs and I strongly believe will be with us long term. In saying this I am not in possession of any privileged information and I am not by inference making any adverse comment about other platforms.

In alphabetical order

Ablrate

One of the new platforms (launched July 2014) that I have chosen to invest in and so far I have had a very positive experience. Specialising in secured Aircraft leasing and Plant and Machinery I have had the chance to diversify into a market that I knew little about before I started on my ‘due diligence’. The market may be new to me but there is a wealth of responsive experience behind Ablrate and coupled with a website update and promised increasing flow of loans I anticipate that my exposure with Ablrate will continue to grow. One interesting ‘innovation’ available on certain loans is ‘Instant Returns’. With long draw down times on some loans the potential for ‘dead money’ is large, instant returns circumvents this issue.

Assetz Capital

I have been investing with Assetz Capital since the second quarter of 2013 and have built up a diversified £ five digit portfolio of secured loans which continues to grow1. As with Ablrate there is a good, responsive and experienced team behind the web site, something that has become more than apparent when dealing with the occasional distressed loans that we must all expect when investing. Assetz Capital have big plans for expansion (they have already grown considerably since I started investing) and a relatively recent change to the way loan parts are bought has removed a very large percentage of the ‘dead money’ scenario that many of us early adopters experienced, not universally liked, I for one view it as a very positive move that has helped to push up my return on investment. I look forward to new opportunities this year.

1 I do not invest by choice in the provision fund protected ‘Green Energy Income Account’ preferring to take on the risk in return for a slightly higher returns.

Wellesley & Co

Again I was one of the early adopters and took advantage of some very attractive introductory rates that were offered. The loan and repayment terms suited my needs perfectly for tax planning purposes. Since then the rates have unsurprisingly been lowered and whilst Wellesley & Co have expanded rapidly and their range of investments on offer has expanded I find myself already invested in those areas with other platforms so I am running full term with my current investments whilst keeping an eye open on what is on offer.

Bondora

I also invest in one non UK platform, Bondora. This would probably be regarded as the ‘odd one out’ in my list of platforms. Far more volatile than the other platforms that I invest in Bondora has expanded rapidly since I started investing in the second quarter of 2013. I have experienced several changes to the platform, some which I have liked and several that I have not. I have experienced new markets being opened up and some eye watering rates of default in these new markets. That said and in spite of the treatment of defaults by the UK tax man and the strengthening of the Pound against the Euro (@16% since I started investing) my return after tax has remained positive. I spend more time on this relatively small percentage of my total investments to keep the returns positive than I do on any of the others. Continue reading →

How I Selected My Preferred P2P Lending Marketplaces – Part I

Guest 1 Comment

This is part I of a guest post by British investor ‘Pete’.

Perhaps an introduction is the best way of starting this blog post since it should explain my reasons and approach to Peer to Peer (P2P) and Peer to Business (P2B) lending.

I am a UK based independent professional engineer. An engineer in my discipline requires a love of detail, data and spreadsheets and being independent it is required that I run my own company so I understand basic accounting and number/data manipulation.

So why do I invest in P2P and P2B? In the past I have had Pension funds raided, Investment funds loosing capital due to stock market losses and fees, a mortgage endowment policy returning 1.9% over 25 years when a simple cash investment returned +9%, shares devalued by the UK government who then bought them out at the devalued rate … a long list of ‘professionally’ managed schemes that lost my money. With P2P and P2B I am in control, I either sink or swim based on my decisions.

I started lending at the start of 2012 with Zopa and to a lesser degree with Ratesetter but not before I had read as much as I could find regarding P2P and the various business models. Using on-line resources research into Company and Directors ‘histories’ followed, a process I continue to use before I start investing with a new platform. Risk and Taxation were the next topics I looked into.

Whilst projected default rates were available on  Zopa I took a pessimistic view and anticipated a higher rate of loss when I put together my first spreadsheet to log my transactions and real rate of return (I mainly use Excel with the XIRR function). My aim with Zopa was to diversify as quickly as possible so I quickly put together a large number of small loans whilst ensuring that I didn’t have ‘dead money’ waiting to be lent out. This strategy worked and my losses have so far turned out to be below the Zopa projected level. In recent years Zopa have changed the way monies are lent out and introduced a provision fund to cover bad debts (Ratesetter have always had a fund) and at the same time investors rates dropped (Zopa dictated the rate at which money was lent) so I decided with regret that Zopa was no longer for me and started to withdraw monies as they became available, a process that will continue for some years since I am still happy with the return from my remaining loans.

In the meantime my Ratesetter account quietly built up (the power of compounding interest) and I had started investing in Funding Circle (Sept 2012). I quickly found out that due diligence was required when investing in listed loans (I do not like automatic bidders, I will always manually invest/re-invest) and whilst time consuming it gives some reassurance that you are not investing blind. Whilst the returns I received (and still receive) from Funding Circle are above those I receive from Zopa and Ratesetter I have found the time taken checking companies can be disproportionate to the return if small loans are made. In spite of due diligence the defaults in my experience are higher and coupled with the current UK taxation system for individuals, defaults can hit your rate of return in a disproportionate way.*

It is for these reasons that I have in the last year started withdrawing cash from Funding Circle in the same manner I am taking with Zopa. In the meantime my Ratesetter account continued to build. Continue reading →

International P2P Lending Services – Loan Volumes November 2014

wiseclerk 1 Comment

November was a month of mixed results for the listed p2p lending services. Some grew, some had a small decline in newly originated loan volume this month. Ratesetter crossed a total volume of 400 million GBP originated since inception. Ablrate profited from the deal with the first institutional investor, which boosted volume. I added one more service.  I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.


Table: P2P Lending Volumes in November 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

International P2P Lending Services – Loan Volumes March 2014 – Round Figures Crossed

wiseclerk 2 Comments

March brought growth for the major p2p lending services. Ratesetter managed to pass Zopa and Funding Circle in newly originated loan volume in the UK. I added one new service to the table. Note that I have switched the reporting currency to Euro as all but two services are located in Europe. Several p2p lending services reached major figures for total loan volume funded since inception:

I do monitor development of p2p lending figures for many markets. Since I already have most of the data on file I can publish statistics on the monthly loan originations for selected p2p lending services.

Table: P2P Lending Volumes in March 2014. Source: own research
Note that volumes have been converted from local currency to Euro for the sake of comparison. Some figures are estimates/approximations.

Notice to p2p lending services not listed:
If you want to be included in this chart in future, please email the following figures on the first working day of a month: total loan volume originated since inception, loan volume originated in previous month, number of loans originated in previous month, average nominal interest rate of loans originated in previous month.

Ratesetter Raises 5M Funding – Valued at over 30M

wiseclerk

Ratesetter has raised 5 million GBP funding in June from existing shareholders, who include Peel Hunt founder Charles Peel, fund manager John Chatfeild-Roberts and Lazard chairman Ken Costa, plus a new Hong Kong-based investor. The founder Peter Behrens and Rhydian Lewis still own an almost 40% stake in the company which in this round had a valuation of more than 30 million GBP. Ratesetter, which aims to fund over 100 million GBP in p2p loans this year, reached break-even in January and will use the new capital to foster further growth.

(Source: Lucy Tobin, London Evening Standard, July 1st 2013)