October 2018 Update – Investment Returns

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My portfolio of investment returns for the month of September 2018 is below.

Investment TypeValue Sep 2018 (Standardised*)Value Oct 2018 (Standardised)Deposits / WithdrawalsMonth Return
Mintos (EUR)0.5290.388-0.1460.88%
Mintos (GEL)0.5740.225-0.3520.44%
Bondora0.3010.3080.0002.24%
Grupeer0.0300.2000.1700.56%
RateSetter (AU)0.4340.4360.0000.62%
US Shares0.7240.7630.0005.44%
Average2.5922.321-0.3282.17%

*All values have been brought back to EUR and have been standardised. The important thing is to not show you how much I am investing per se, rather how much return is possible each month.

 

This Month:

This month was still very busy with the newborn, so hence posts are a little sparse. As per my comment last month about GEL loans, it is not a surprise that they were a poor performer in my portfolio this month. I have still been unable to find any loans in GEL that are paying >16%. As a result, I have moved some money into Grupeer and looked into a few new investing platforms (that you will see next month). Grupeer doesn’t show much of a gain as funds were added late into the month.

 

 

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4 Comments

  1. Hello Matt,

    Congrats in your new born. As father of a little boy, my advice to you is that enjoy the present moment, it would get a lot more busy once she starts to walk and climb. That’s where the real fun begins.

    Looks like you did well last month. I wonder how did you achieved >2% return in a single month in Bondora. I had an account in Bondora, but it never really worked for me. It was my first account, and I accidentally turned on the auto-invest. Before I know it, I have a bunch of D, E rating loans. Since there was no payback guarantee, I was especially uncomfortable with that. I lost faith basically right away and left the account sitting there (without auto-invest) for 18 months. Recently, I sold off my account and lost about 20% of the portfolio. I wasn’t bitter about the loss, just didn’t like the transparency of the auto-invest. The liquidation option of the portfolio where they would give you a single price to sell off everything is actually quite nice, I would say for liquidity.

    I am still considering diversifying my portfolio among different platform. I still like Mintos the best, but probably safer to have other accounts as well. My account with Twino is steady, but the lack of loans available make me move a lot of the funds over to Mintos. I am thinking of starting in Grupeer, but didn’t get much success in registration.

    Seems that the interest rate is going to increase in the larger economy. Do you have a view how this would affect the P2P lending landscape?

    • Hi Hank,

      Thanks for the advice! I guess I better make the most of my time now before I am chasing her around the house!

      That sucks to hear about your experience with Bondora. I think you have to be comfortable with the P2P platforms that you are using. I have only started using Bondora within the last few months, so it is still new to me. I agree that the transparency around the auto-invest feature is not great. However, I am finding that other platforms are pushing more auto-invest approaches as well (i.e. loans on Robo Cash and the new Mintos auto-invest for secondary market etc.). I think it will be extremely difficult to pick out good secondary loans through Mintos once the auto invest feature is turned on.

      Regarding that 2% increase, there could have been a little lag effect from purchasing loans the month before – it will be interesting to see if that trend continues. I estimate that it may fall to around 1.5% (currently sitting at +0.5% this month). Looking at the account, it appears there have only been a few late payments so far. Half of my investments through Bondora are sitting in the D rating but vary from B to High Risk. However, not having the safety of a buyback guarantee on Bondora is quite worrying. I do believe though, that Bondora does deal better with debt collection than the other platforms.

      I have found that Grupeer offers less loans, but more expensive (i.e. commercial). So, you may only have 10 loans available, but they are all worth €7,000 – €30,000. What were you having trouble with in Grupeer?

      I haven’t tried Twino yet. But, this month I have opened accounts with Envestio, Crowd Estate and Robo Cash. I found that Robo Cash is a bit like Bondora, where you must have an auto-invest feature turned on to be able to be competitive in investing in available loans. I find Crowd Estate good, however, main drawbacks could be that interest and initial investment may only be paid out at the completion of the loan, and loans are not always available. I currently like Envestio and have found that they are like Grupeer (fewer, but bigger loans). Another alternative that I will try soon is Omaraha.

      I am not sure how the interest rate will affect the P2P landscape, but I am worried that if there is a market crash in the next couple of years, some borrowers may not be able to pay back their loans. However, if there is no market crash, and the interest rates in the economy go up, we would hopefully see an increase in P2P returns!

      Matt

      • Hello Matt,

        I think the return of my account has not been at its peak are from 2 major reasons: 1) short term loans and 2) diversification among loan originators.

        I would say over 90% of my portfolio is maturing 45 days or less. The rest of the loans were probably invested when I just started over a year ago. From what I am seeing the available loans, I think this is becoming a trend. Also, having these short term loans artificially inflated the growth of “new loans issued” by the platforms. The return have been good as well, 10-12% is relatively common.

        For my experience with Mintos, it seems that Varks always top my list as the loan originator whom has the highest return in the primary market. At the beginning, I was just chasing yields. But I see Varks way too often to be comfortable with just investing with them. Then I looked at my portfolio and noticed that the proportion is really unhealthy. Now, I am making a rule for myself that I will not invest more than 15% of my portfolio with one single loan originator. In case any of them pull an “Eurocent”, it wouldn’t be as painful. Besides return, duration and payment status, are the other criterion that you would consider as well?

        Despite USD raising its interest rate, EUR has not moved yet. I am a bit more skeptical that when the hike happens, the whole P2P market may freaked out. After all, most of the stakeholders are individuals.

  2. Hi Hank,

    I don’t have too much experience with Varks, but they seem to have an Okay rating (“B” according to Mintos). It can be hard to diversify between originators as there may only be a couple with loans available. I just looked through my profile, and I notice that most of my investments are through Mogo, Banknote and Lendo (combined take up 70% of the portfolio).

    Apart from return, duration and payment status, I always make sure that there is past payment history from the borrower (i.e. making sure that they have made at least one payment back, on time). However, I have noticed that sometimes the payment history data can be blank, only showing the status as “paid”. When this occurs, I also check to make sure that the loan amount and the remaining principal are different. If they are the same, I do not invest. Recently, I have also started to consider the country that the loan is issued in (Georgia, Lithuania, Latvia and Estonia are my most common).

    If interest rates were to go up, it may not just affect investors, but also borrowers as well. We could see an influx of borrowers starting to seek finance on these P2P platforms as they could offer more favourable interest rates compared to European banks. If people do start withdrawing money from the platforms, there may be more incentive for Mintos or the loan originators to offer investment incentives to cope with the demand.

    With the current status of world finance, I would not be surprised if we were to see something happen in this space soon!

    Matt

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