Panel: Risks and opportunities in P2P lending

Monday there was a pretty cool panel about the risks and opportunities in P2P lending. The panel members were the CEO’s of Bondora, Mintos, Moneyzen and Twino and myself. The panel was held in English and I think we got a pretty good discussion going about what is happening in P2P.

You can now see the panel on Youtube as well, so take a look! (Discussion starts about 5 minutes in.)

Social lending portfolio (March, 2016)

Honestly, so many things were happening in P2P in Estonia in March that it was difficult to keep track of everything. Overall, big numbers, some chaos and interesting future perspectives would probably describe the month. Overall, I just got back from London and it was an experience in how far behind we are when it comes to investing being mainstream – you can hardly look anywhere in central London (or on the metro) and not see some sort of advertising for investing. Things are hopefully changing here as well, though.

Bondora personal portfolio

marchbondoraprivate

I’ve started the process of wrapping up my private portfolio, which can be seen from the dip in interest earned (below 100€ for the first time in 6 months). What this means is that I am selling off defaults and old mispriced loans, that I want to get rid of. Current plan is to sell off the not-so-great parts of my portfolio within this year, and then do a sale for the better loans next January (so the tax obligation would arrive mid-2018).

Overall I think it’s a reasonable plan because 1) secondary market is so slow at the moment that I don’t want to dedicate too much of my time to selling things 2) selling good EST loans at a premium won’t be an issue, so I might as well let them pay as they are, and then sell the ones that are too far from deadline once I actively pull out. I’ve transferred out 1K of money, which is going into stocks since it’s money invested as a private person.

Bondora business portfolio

marchbondorabusiness

For my business portfolio, I am a bit torn. Bondora is not the highest returning part of my P2P portfolio (Omaraha is), however Omaraha is unable to offer enough volume and lacks a secondary market. So it seems that Bondora will have to remain the biggest part of my portfolio at this point. There was a slight dip in interest returns since last month a lot of the loans started with frontloaded interest payments, it should stabilize out and start climbing now.

Omaraha portfolio

marchomaraha

As time goes on, I have to admit, I am liking Omaraha more and more. It is clearly currently top when it comes to returns, since I haven’t had any defaults yet. However, they recently announced that all new defaults will have a buyback at 80% of principal value, which means that the potential loss isn’t immense – especially since most of my loans (90%) are 900+ (the highest) credit group. Looking rather stable, and aiming to get to 100/month in interest earned by some time in autumn. Will see, depending on how I manage the different proportions – adding money to Omaraha is heavily dependent on their volume of loans. I mostly just add money when what I have on the account has run out.

Mintos, Twino, Viventor

marchlatvians

I’ve essentially given up with my idea that Mintos could offer reasonable short-length loans and slightly replayed the proportions between Twino and Mintos. Of course, Twino has been slightly confusing this month, the biggest problem being that the autobidder is slightly broken at the moment. Viventor finally managed to get theirs working though, so there must be balance in the universe 😉

Currently Twino/Mintos stand equal in my portfolio (just added the money into Mintos later, which is why the interest returns lag). For Viventor, they seem to be doing OK, so I will probably add in a couple of hundred extra there just for their 1-month length loans. Mintos’s offers of 13% consumer loans and 13,5% car loans means that even though I’m not a fan of the loan lengths there, it does slightly pull ahead in the race of the Latvian platforms at the moment.

Crowdestate

I have this dream, that one day CrowdEstate’s IT system will work as intended. At this point it seems like they are still suffering from issues when a new project releases, which made this project fun – since I was in London I had to find a Starbucks for wifi and then suffer through the horror of using their website on my mobile phone. I really want them to do well, but issues like this take away a lot of goodwill that investors would otherwise have.

Estateguru, Moneyzen & Investly

Estateguru is impressing with volumes, however as stated before, not adding any money currently since my portfolio there is private (no word of a secondary market for a long time now).

Moneyzen did not manage to get the new regulatory license on time, which means that no new loans are being given out. Which makes me reasonably happy that I ‘only’ have 500€ there, but it’s not being reinvested, so not good overall.

Investly seems to have gotten their pipeline for factoring (invoice selling)  going, there seems to be a reasonable amount of invoices listed, which is making me consider actually finalizing my registration and testing them out.

Social lending portfolio (February, 2016)

February passed so quickly that I didn’t really even have time to do much. However, despite the shortness, it was a nice growth month, with several interesting things happening on many P2P portals.

Bondora personal portfolio

Interestingly enough Bondora was by far the biggest surprise this month – after such a long time of investors complaining about all the things, they seem to have taken the investors’ wishlist and just started crossing off all the things that have piled up in the past few years. New cash flow & dashboard components allow for some interesting modelling options for your portfolio’s future. I haven’t had too much time to play around with it, but I must admit I like what I’m seeing!

febbondoraprivate

Interest returns are now slowly starting to drop (to 108€) due to the fact that I’m slowly starting my exit. I’ve transferred out my first 450€ (which is being sent to work on the stock market). I’ve also started to slowly sell parts of my portfolio that will be selling at a loss – I don’t have to take into account any taxation issues on those, and at this moment selling large amounts of loans on the secondary market is definitely not comfortable. However, I’ve started to scan through my loans and started selling off defaulted loans that haven’t really started to recover and loans that are suffer from pricing issues (old HR loans with 20%-ish interest rates). It takes some playing around with discount rates, but I’m happy with how it’s going so far. The loans I’ll sell with a premium I’ll start selling Jan 2017 – meaning the tax obligation hits summer 2018.

Bondora business portfolio

febbondorabusiness

The business portfolio is growing as planned. I’ll hit 200 loan pieces soon and then I’ll likely increase the bid size a bit. Overall absolutely no issues with money going out (I’m not using too strict criteria – just country & credit group limited). I must say I am pleased with the pricing changes since it’s clear to see when comparing my two portfolios that loans that are priced with the rating follow expectations reasonably well – AA, A, B loans are showing very good payment discipline, I hope the likelihood of defaults is also correctly determined, as my portfolio grows I’m becoming more of a fan of slow and steady.

Omaraha portfolio

febomaraha

Omaraha is doing slow and steady, most important news is that there was an announcement that they’ve received the permit needed to keep functioning from the Estonian Financial Authority. Still, Omaraha has some downsides – at this point I haven’t had any loans go out for 8 days (usually the rate is about 1 loan/day). I’m wondering if it’ll start moving or I’ll have to play around with the interest rates. I like their no-hassle system but lack of a secondary market is making me balance investments between different portals, and not letting Omaraha move too far ahead.

Mintos, Twino, Viventor

feblatvians

Interestingly enough the Latvian buyback triplets caused most hassle for me this month. Mintos could still use some usability upgrades, and it’s become clear that short-term investing there isn’t viable due to a lack of short term loans. However, my hopes for Twino becoming a major player in my portfolio were dashed with their brutal interest cut and some recent communication blunders. I did start investing in Viventor as well, but that’s mostly play-money at this point as they build up their reliability.

Definitely interesting choices to be made here in the near future – if the Latvians had managed to keep going as well as they were for the next few months, I think they would have wormed their ways into investors’ hearts even more, but as it stands, making decisions to divide my P2P portfolio is becoming difficult with all sites having some downsides.

Crowdestate portfolio

I contributed a small amount in the most recent CE project. A new one is opening for this months, I’m interested to see what it is. As it stands, the first round of investments that I’ve contributed in are starting to finish up, so I hope that the reinvestment snowball will start rolling at some point.

Estateguru & Moneyzen portfolios

Did not add any new money to either. Would probably exit if possible (at the very least to switch to business portfolios), but both stil lack a secondary market. At least my investments in MZ are small enough to get reinvested rather regularly. With Estateguru I’m just stacking up money to probably transfer it out at some point.

Social lending portfolio (January, 2016)

This month has been fun in social lending. I’ve been discovering new portals, rearranging investments to switch things to my business account and overall making plans for this year.

Bondora personal portfolio

I’m starting to take money out of my personal portfolio as of this month. Currently I’ve set it to invest into Estonian AA & A loans, seems like getting about 10 of those a month is a solid enough strategy. I’m hoping to take out all the money invested within the next two years and then make a full exit within the third. Despite that, January was a record month since the lack of reinvesting isn’t felt yet.

janbondoraprivate

Total interest earned climbed a bit over 110€, next month should probably be a bit smaller in terms of the total amount yet. This month brought about many changes at Bondora, a lot of the new reports I like, the lack of meaningful recovery data is still a bit annoying, but overall I like the new cash flow, especially the predictive part of it.

Bondora business portfolio

There isn’t much to report here yet. I’ve invested into about 150 loans, and most of them start repaying in February. January interest income was ~10€, but the interest income for February should already be in the range of 50€. Current strategy is Estonian loans, up to C class (a bit of D as well), currently investing 20€ per piece mostly, seems like getting 100+ EST loans with non-strict criteria is rather easily doable.

Omaraha portfolio

Now, Omaraha is rather interesting. The guesswork included in trying to figure out which interest rates to use is definitely an intriguing thought exercise. Seems like I’ve managed to reach a sort of a sweet spot where I have, on average, one loan go out per month. No loans have reached delinquency yet, but time will tell how that starts impacting my portfolio. The defaulted loans get sold off to a buyback fund, so you can assess your returns in a more immediate manner than you can do in Bondora.

janomaraha

I started with the portfolio in November already, the interest payments are however just now ramping up, February totals should be somewhere in the range if 45€ already. Overall, not much to follow here and you don’t really have access to any meaningful data to analyse. Lack of secondary market is still problematic, so this can’t ever be the biggest part of my portfolio, even if the returns at this point seem rather good.

Mintos & Twino

The two Latvian sites are also in experimental stages at this point. Since I wanted to add money into short term loans, then so far Twino has been winning out on that – super easy and sleek user interface, no cash drag to speak of, and a wide array of loans to invest into. For Mintos, it seems that short term loans (or invoices) are in short supply if you want to actually diversify reasonally. Due to this I’ve added less money into Mintos so far, and I’ve had to pick out more long term loans to actually employ all the money. Both sites have secondary markets though, so exit is possible. So far looks like Twino will be winning out for me personally in this duel.

jantwinomintos

Estateguru & Moneyzen

I did not add in any money to Estateguru or Moneyzen. If possible, I would exit Estateguru as a private person and switch to a company portfolio. For Moneyzen a lack of a secondary market and lack of volumes makes me not want to add more funds either. Currently I’m just seeing how their recovery processes work.

janmoneyzen

Crowdestate

Not much happening on this front either. Waiting for some projects to end (the first one I was involved in, was finished in December). There will be a new project open on Monday so I’ll look into that and decide whether to contribute as well. Still hoping they manage to actually hit the pace of 1 project/month.

2015 social lending summary

One of the focuses of this year has been to reduce the importance of P2P investments in my portfolio – at the start of the year P2P investments made up probably about 70% of my overall investments, then by the end of the year I’m finishing somewhere in the 25% range. Moving P2P investments under my business account will likely mean that I’ll allow this percentage to rise a bit again due to not taking such a huge tax hit.

The “winners”: Bondora, Omaraha & CrowdEstate

Bondora

I spoke about my Bondora portfolio in more detail in my previous post, but overall, despite all the drama, lack of information and overall chaos, Bondora is still performing well. Total interest earned climbed over 2K and my steady montly interest income was 100€. This level will start dropping with the withdrawals, but overall I’m happy. Total interest & recovery as follows:

2015totalinterest

2015recovery

Currently in the process of building the business account, focusing on Estonian loans only. Managed to give out 100 loans in December, if the pace keeps at that level, It’ll overcome my private portfolio rather soon.

Omaraha

For a long time I kept away from Omaraha due to not having enough extra funds available, and the relatively questionable reputation they had, but this year I finally looked into it. The interest rates are comparable to Bondora, and similarly to Bondora, I managed to give out about 100 loans in the month of December, making it seem realistic that it will keep up with the Bondora portfolio – so far other P2P portals in Estonia have struggled to offer meaningful volumes.

However, from others’ experience I am assuming a portfolio up to 10K shouldn’t be an issue even there. I’m predicting a 2:1 rate of deposits between Bondora and Omaraha. (Overall, lack of a secondary market remains an issue though!)

CrowdEstate

With the first exits made in the second half of this year, Crowdestate’s reliability also skyrocketed. One of my investments just exited and I have 9 more running (2 as a private person, the other 7 as a business). Other than the disastrous new web page they have done rather good. As usual, would have waited for more projects, but reliability is king, so I’d rather they take time and do proper due diligence.

Overall, will remain a part of my portfolio for sure, and waiting for interesting times once new projects start exiting – I’ll have to decide whether to start increasing my investment size or keeping it at the current level. This will probably largely depend on the amount of projects available.

The “losers”: Moneyzen, Estateguru

Moneyzen

Theoretically everything is fine with Moneyzen, practically if you want to actually build a meaningful portfolio, then no can do. Currently I haven’t managed to really increase my investments there (and in my opinion my loan % rates are low enough as they are). Also, two big issues – the promised low level of defaults (definitely not seeing that in my portfolio!) – still a lack of a secondary market (makes me not want to transfer in any more money). Overall picture at the end of the year, nothing too interesting:

2015moneyzen

Total interest earned for this year comes to ~60 euros, which is a nice sum of money, but as you can see from the standing money on the account – nothing is just happening. I’m rather sad about this, I hoped for a lot more from them.

Estateguru

Now, with Estateguru it’s an interesting case. They started out with a different profile than Crowdestate, but by the end of the year they had grown quite similar. Shows that there isn’t enough room in the Estonian market to be so specific.

Overall, I invested into some of their projects, but surprisingly I think the thing that put me off most was the minimum investment size of 50€. To keep any meaningful money moving (to reduce cash drag) I’d have to invest a bit too much money at the moment to feel comfortable (since, once again, no secondary market). Currently planning to not add more money in, maybe every now and then when I see a project that I really like.

The “unknown”: Mintos, Twino, Fundwise

Mintos

Mintos came to the market with a bang and is showing rather nice growth in terms of both loan volumes and investor amounts. Biggest draw is probably the buy-back guarantee, which I can see is luring in a lot of investors.

However, looking at the overall returns they are getting lower by the month, and I’m not sure it’s worth the effort to diversify into another portal (However, they do have a secondary market, so that makes them rather attractive). I might just throw in 500€ to see how they work.

Twino

Twino is another new portal that hit the market with a bang and as with Mintos, their main appeal is that of a buyback guarantee. However, due to the loans they give out – essentially payday loans – they run a rather more risky business model (or maybe more profitable, will have to read their financial reports to know that).

However, a guaranteed 12%-ish return is something that I can see people appreciating. Another thing that for me makes them more appealing than some others is the short time frame of the loans – being able to actually fully exit rather quickly instead of dealing with long term rescheduled loans and a drawn out exit. Once again, I might just throw in 500€ to see how they work (business accounts became possible just in December).

Fundwise

Fundwise is offering out a whole brave new world for P2P investors – equity based investing for those interested in start-ups. From afar it looks amazing, taking a closer look, there are a lot of problems and at this point I would still classify their main purpose to be similar to a charity.

Why? You get no rights, no returns guarantees (note even your principal is in any way guaranteed), there is no way of predicting any returns whatsoever, you are locked down for years and the valuations (500K-1Mil) are taken out of thin air. I get contributing if you feel very passionate about a business or a product, but I wouldn’t really take this as a serious investment.