Pete2Peer Portfolio Performance

The last six months has seen the introduction of two addition P2P platforms into my investment portfolio.  With a growing portfolio of four peer to peer platforms I feel it’s time to give an update on how each has tracked and provide an overview of how the portfolio has performed as a whole.

TruePillars

In the last six months adjusted my focus on loan diversity and have been working to lower my individual exposure to a single loan: I’ve made great headway in this regard with just under 100 different loans and a current max exposure of 3.6%.  New loans I purchase into now only account for approximately 1.2 % of my TruePillars portfolio.  To date I’ve not had a single default although I am tracking a couple of loans that have experienced late payments. 

I’ve sliced data two ways to show the makeup of loan grades and the distribution of the industries I invest in.  TruePillars rates loans from 1 to 5 with 5 considered the lowest risk below is distribution of loan grades in my portfolio.

With 100 loans it allows for diversification across multiple industries.  Breaking these out based on the standard industries against each loan, the following pie chart shows my investment portfolio distribution.

Overall my TruePillars account is progressing well with some steady returns of just over 12%.

MoneySpot

This platform has been a consistent earner for us with no active involvement required from myself achieving annualised returns of around 12.6%.

RateSetter

I’ve continued to add to this platform most months which has resulted in the returns currently a little depressed compared to what I was expecting of them.  The returns are currently achieving around 6% which I expect should level out at around the 8% mark.  Over the next few months I expect to continue to add some funds to increase the overall portfolio weight of this platform.  

OurMoneyMarket

This platform is still relatively new for me and I’m still working to get funds invested with only 14 loans currently in the loan book.  The platform has required a lot more work on my part to diversify my funds across multiple loans – more than I expected and hence returns have been slow building up.  The reporting on this platform is also not user friendly to generate your own reports.  As such I’ve pulled the basic info from the site to show my current investment values in their respective loan grades.  OurMoneyMarket ranks loans from A+ to D grade loans with A+ considered lowest risk borrowers.  

While I’m still investing funds in this platform the returns have been low but I expect them to continue to grow.  It’s currently too early to project where I think my performance settle.  I’ll keep you posted and how it is tracking in about six months’ time for a relative comparison to the other platforms.  

Overall Performance

To keep track of the individual performances of each platform, I track them on a single graph below.  In addition to this I aggregate the results to give my overall portfolio returns.

We can see that the overall returns of the portfolio are tracking about 11.4%.  Part of the driver for this is the current overweight allocation to TruePillars and MoneySpot.  From the graph below we can see that two platforms currently make up 80% of my invested funds.  I’m working to change this over the next few months to see a more balanced portfolio moving forward.

Some might question why you wouldn’t just invest all your funds into the platform that provides the best returns, the need for diversification across platforms is important to ensure you are not exposed to the risks of a single platform.  These are my results achieved to date and everyone will be different based on the loans in the mix.  As always interested to hear other peoples’ experiences and returns.  

Do you have time to invest in Peer to Peer Lending?

I’ve have been asked recently by several followers how much time I actually spend managing my peer to peer investments and at first I didn’t really have an answer.  Having thought and reflected on this, it’s a valid question as you must place a value on your time.  Thinking through what I do, I’ve broken down my thoughts on how much time I dedicate to managing my Peer to Peer Lending accounts.  As I currently invest in four different platforms, I’ve split out my thoughts on each.

TruePillars – If you are a regular follower, you will know TruePillars was my first peer to peer investment platform.  As such I spent a lot of time on the site in the beginning learning about the platform and understanding how the process worked and buying up loans on the secondary market as well as new loans when available.  Now I spend much less time on the site.  I would check the account once a week or so to take note and track any loans that are overdue (5 minutes a week).  In addition to this when new loans are listed (which I’m notified by TruePillars via text) I’ll log on and place a bid on the new loan (5 minutes to log on have a quick read through the loan on offer and place a bid).  However I’ve just activated the auto bid function to reduce my time commitments now I’m comfortable with how the platform works and keen to test this functionality out.  In addition to the above at the end of the month spend about half an hour reviewing and updating my performance tracking.

MoneySpot – This platform takes no time on my part to manage.  The platform is based on pooled fund where you are paid a return on the funds you have invested.  Apart from the time to fill in the application form, it’s checking once a month to have a read of the monthly report and taking note of the returns I’ve received which would take less than 10 minutes.  In my case I’ve opted for auto reinvestment to allow my investment to grow at a compounded rate.

RateSetter – This platform also takes little time on my part to manage.  When I add funds in I log in a few times to split up the funds I’ve commit to loans to help me feel comfortable I’ve diversified across multiple loans.  Each time it might take a few minutes.  On top of this I’ll log in once a week and reinvest any repaid funds sitting in the account (5 minutes).  I’ve not used the auto invest on this platform as I believe I can get a slightly higher rate by manually entering noting there is a time commitment on my part.  On the flip side if you are time poor and prepared to accept the auto bid prices this could be used as a time saver.  Like the other platforms at the end of the month I’ll also spend about 10 minutes or so reviewing and updating my performance tracking.

OurMoneyMarket – This platform is still relatively new for me and is currently where I’m spending more time while I work out how to get the best out of the platform and get my funds invested across multiple loans.  This would typically look like logging in every day or two to check for new loans to invest in (5 mins a go).  Again at the end of the month to track my monthly performance.

Adding up the different times spent, overall it would equate to under 45 minutes a week and an extra half an hour at the end of the month while document my performance of the different platforms.  While this is my experience investing over multiple platforms, I realise not everyone is the same and may not have similar time available.  To be honest, you can be as active or passive as you like, as each platform I invest in, offers a form of auto investing to cater for the time poor.  I’m comfortable with the time I spend as I like to be more actively involved and want to understand what I am investing in.  As I become more familiar with the platforms, I’m more comfortable with using the auto invest functions where appropriate.  Interested to hear about other people’s lending experiences and times commitments they make.

Learnings and Strategy Update

Investing is all about learning, applying and adjusting the strategy you adopt as you go along.  Having taken this principle on board, I’ve been adjusting and refining my strategies as I learn more about the Peer to Peer lending market and each of the platforms I invest on.

Having invested with a TruePillars now for about nine months, there is much that I’ve learnt, which if I were to start over, I would apply straight away.  The first and most important takeaway for me is that the diversification takes time.  Don’t be tempted to over commit to any one loan just to get money invested.  I think I may have been a little overly keen at the start but soon learned the value of patience to invest lower amounts into each loan.  This has allowed me to better diversify my TruePillars portfolio, which now has just shy of 100 loans.  My biggest exposure in a single loan currently sits at 3.7% and new loan investments are going in at just over 1% of the current portfolio valve.

While I am fortunate to not have had a default yet, my journey is still young and I’m sure I will experience this as time progresses.  Default is the final outcome of a bad loan and while I’ve not experienced this, I have experienced a number of late payments on different loans.  Some only have one late payment and then continue on paying on time while others have continued on to multiple late payments.  At this stage, I’m not sure on the best approach to manage these loans to ensure maximum returns.  On TruePillars there is the option to sell out of a loan if the last payments have been on time.  I’ve done this for a number of loans that experienced late payments, however looking back at these loans, you can see some have continued to pay on time while others are still at risk.  Stay tuned as I continue to refine this part of my strategy.

What I’ve noticed is there are a number similarities between TruePillars and OurMoneyMarket in the way you can invest in individual loans (albeit business versus consumer loans respectively).  As such I’ve taken the learnings to date from TruePillars and started applying them to this new platform.  I’ve started with a smaller investment per loan and aiming to going to grow this loan book slowly.  With the focus on consumer loans (that start as low as a few thousand dollars) I am expecting that there should be more loans to invest in.

What I’ve perceived to date is that there does not appear to be the same amount of investor activity on OurMoneyMarket as I’m currently experiencing on TruePillars or RateSetter.  This I think is hampering how quickly I can grow my diversified investment portfolio.  This is evidenced by having a number of loans not get funded before the 14 day on market period ends.  Compare this against the last TruePillars loan that was fully funded within a few hours of listing (for a loan 10x the size).  I’m sure as more people become aware of OurMoneyMarket and investment on the platform this will change.

As a general observation of the consumer loan market, it seems a lot more fickle than the business loan space.  Loans appear and disappear (without being fully funded) in what look like the borrower changing their mind and withdrawing their application (and as such any committed funds to that loan are returned).  It is still early days with OurMoneyMarket and although there are similarities, there are differences which I’m still working through to get the most out of the platform. 

If anyone does use OurMoneyMarket, or any other Peer to Peer Lending platform, I would like to hear your experiences.

Nine months into P2P lending: update and general observations

Having invested in peer to peer lending now for about nine months with active investments in four platforms, I thought I would give a general update on what I’ve seen and experienced.  For each of the platforms there are subtle things I’ve noticed about either the platform or lending market it operates in, that I think is worthy of sharing. 

Starting with TruePillars, which was my first investment platform, the biggest thing I’ve noticed is investor activity has picked up a lot over the last few months.  This is noticeable from how quickly new loan auctions have taken up, quite often fully subscribed to the lowest rate on offer.  While this is good for TruePillars, it does mean you need to ensure you get your bid in early for a piece of the loan.  This activity is also driving down the overall returns investors are seeing.  TruePillars has recently acknowledged this and are aiming to increase the number of loans issued. Therefore, at the present time, TruePillars is best utilised by those keen to be actively involved on a daily basis in their peer to peer portfolio.

MoneySpot has been a consistent earner which has taken no time on my part.  One thing I recently noticed in the April monthly investor report was the average bad debt increased for the first time from what I can see going from 3.82% up to 4.85%.  Even with the increase in bad debts, however, the annualised monthly returns were comparable with previous months. This is something I intend to keep an eye on to ensure it doesn’t begin to impact on my overall returns. 

While I’ve only been investing in RateSetter a short time since February this year, I’ve seen a fairly rapid drop on interest rates by about 1% in the 5 year lending market.  This drop has occurred between March and April with the the interest rates dropping about 1.3%. Interest rates have come back a little, however they are still trading about 1% below my first investment.  Again I believe this is linked to the amount of money people have sitting there ready to invest, where you can commonly see over one million on the market for investment just in the five year leading market.  The other markets also having significant investor funds sitting there ready for investment.

While I’m still very new to Our Money Market, I can say that they have excellent customer service.  I had a couple of questions on the account and as such called Our Money Market.   My phone call was answered immediately by a real person who was extremely helpful. I really appreciated that this is one of the few occasions I’ve attempted to access customer service without first being directed through an automated service.  A second time I had some clarification questions, and given it was Thursday night, I emailed them through not expecting a response until the next day.  To my surprise Our Money Market responded that night.  While it is still early days with investing on this platform, I’ve been very impressed with their customer service.

These are just a few of the things I’ve picked up on my journey to date which I thought were noteworthy. As always keen to hear about your experiences whether they be good or bad and what platforms people are using.