Monday, 22 April 2019

Comparison of Peer to Peer Lending retail investment platforms


Having identified a number of platforms available to retail investors, I wanted to break down what is on offer by each to be able to make an informed choice on which I potentially wanted to invest in.  Following the same logic I used for selecting my first peer to peer platform, I focused on the following;

  • How the investment logistics works
  • What are the minimum investment terms
  • What are the fees involved
  • What is the historical performance
As such I will be focusing on Estate Baron, Funding, Latrobe Financial, Lendex and Our Money Market.


Estate BaronEstate Baron works a little differently too many of the other peer to peer platforms.  You select a development to invest in and get your return typically on completion and sale of the project (which can be several years from point of investment).  The quoted returns are typically for the duration of the project (e.g. if a project estimates 20% returns and the expected duration is 18 months, your annual return is 20% divided by 1.5 years which is 13.3% pa.  Note if the project goes longer your capital may be tied up for longer and your returns reduce the longer it goes on.  On the flip side the reverse is true if it is finished early.  Returns on projects vary greatly as do the minimum investments (minimums from $2,000 to $50,000).  For investors seeking regular income, Estate Baron do have an investment called Monthly Baron ($20,000 minimum) that has targeted returns of 10% aimed to provide monthly incomes through a diversified portfolio of property development investments.

Funding Funding offers short to medium term loans (1 month to 3 years) with residential backed securities to a maximum Loan to Value Ratio of 70%.  The minimum Investment in a single loan is $5,000 and can be added to in $1,000 increments after the minimum investment into each loan.  Funding have target investor returns of 7% after fees.  If I’ve read the PDS correctly, Management fees are no more than 6% of the outstanding loan amount.  This is paid by the borrower after collections are made on behalf of investors.

Latrobe Financial Latrobe Financial offers several types of investment however I have focused on their P2P loan offering which Latrobe has named Selective Investments Account.  The Selective Investments account offers individual investment into residential and commercial property loans. Each loan is secured with a registered first mortgage over the property.  Loans range between 12 months to 5 years in length with the rolling 12 month investor performance currently sitting at 7.87%.  Labtrobe management fees are 1.45% of the total funds invested. It should be noted that on this platform, that on top the main PDS, there is a Supplementary PDS for every loan available for individual investment.  

LendexLendex offer investments in commercial and residential property loans secured by registered first mortgages.  Loans can have terms between 1 to 15 years with quoted investor returns ranging between 3.73% and 8.5% (AA rated residential loans to B rated commercial loans).  The two items that are not clear from the website are the minimum investment amount and how Lendex make their money (e.g. a management fee or percentage of the interest).  Watch this space as I endeavour to find out the details.

Our Money MarketOur Money Market offers individual investment into non-secured personal loans with terms ranging from 3 to 5 years with the minimum investment of $50 towards a single loan.  Our Money Market have a single service fee of 12.5% of all interest earned.  The current performance of all their loans issued to date has given an average return of 11.41% to investors.

I’ve updated the original table showcasing the performance of the different platforms.  In this case I’ve updated the current historical performance of the first four that were covered in my earlier blog for easier comparison of the retail investment platforms.

Provider
Fees
Min Investment Term
Historical Performance
MoneySpot
1.075% Management Fee
1.025% Expense Fee
6 Months
12.84% (1)
RateSetter
10% of all interest earnt
1 Month
7.69% (2)
TruePillars
2% of the interest rate offered to the borrow
1 Year
10.88% (3)
Wisr
1.79375% Management Fee
1.045% Fund Admin Fee
36 Months
7.67% (4)
Estate Barron
Unknown
12 months
10%+ (5)
Funding
No more than 6% of loan amount
1 month
7% (6)
Latrobe Financial
1.45% Management Fee
1 month
7.87% (7)
Lendex
Unknown at this stage
1 Year
3.73% to 8.50% (8)
Our Money Market
12.5% of all interest earnt
3 Years
11.41 % (9)
I’m always on the lookout for new platforms, so if you do hear about one not listed above, please let me know.  Our next investment and platform review will be Our Money Market.  I’ve selected this platform given the low entry point for diversification and great returns.  

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