Loan Platform Roundup – Oct. 2019
Bad month on Mintos and Crowdestate, a new platform on my portfolio, and great developments on EVOEstate
Table of Contents
- My distribution and profit
- Fast Invest
- Affiliate earnings
My distribution and profit
Interest rates on Mintos are still struggling to climb back to the level they were a few months ago. What worries me isn’t the drop from 15% to 11.5% for high-risk loans, but rather the drop from 12% to 9.5% for lower-risk loans. Such rates don’t offer a significant advantage over traditional investments, which motivates investors to either withdraw money or allocate it to riskier loans, thus creating unbalanced portfolios.
Worse yet, two loan originators have gone into financial distress within a short period of time, and the updates regarding those cases reveal worrisome details about the agreements between Mintos and loan originators. Evidently, originators can simply stop transferring money to Mintos when they run out of money, even if the loans continue to be repaid by the borrowers. Rather than turning to legal measures, Mintos is handling these originators with rubber gloves, so far with little success.
Mintos needs to reevaluate their entire legal framework with originators, and begin utilising SPVs to create a clear distinction between loan repayments and other originator assets. My trust in them has declined, and I have withdrawn a few thousands Euros this month.
Tarya is the largest P2P platform in Israel and the second-largest investment in my loan portfolio. It’s a direct P2P platform offering personal, mortgage, car and business loans to near-prime borrowers. Returns are comparable to Western European platforms, and much lower than Baltic platforms – but with much lower risk. Tarya deducts tax at source, so the return you are seeing in the table above is net.
This wasn’t my best month on Tarya. There was a bit of cash drag, and one of my loans defaulted. I’m considering moving some money into another Israeli platform called BTB, which offers business loans with slightly higher returns and a provision fund. Sill, I wish there were a platform offering similar returns to the Baltic platforms, in my local currency.
Two important steps towards transparency were taken this month. First, Grupeer made its 2018 annual report public. The report shows significant growth and a small loss – not bad considering the fact that Grupeer was only launched in 2017. I expect the 2019 report to show a similar growth trend with a similar level of loss, with 2020 being the point of break-even. Just my personal estimate.
Second, Grupeer introduced ratings for their loan originators. I take this as a sign of good will more than a serious rating system, since most of the originators (including the 3 added this month) are backed by Finsputnik Platforma anyway. For example, if Lion Lender is rated D and Finsputnik is rated A, the combined entity actually deserves more of a B Rating.
Grupeer is on the right path, but it needs new originators that are not affiliated with Finsputnik to offer more diversification. Still, with the latest originator offering 13% interest + 1% cashback, this may be a good time to enter Grupeer.
Only three new loans were published in October, two of them tiers of the same project.
Just a month after the trouble with borrower Q-Haus, another large borrower, Baltic Forest, has filed for “reorganisation”. This doesn’t necessarily mean that the money is lost: The company still generates income, and might get back to repaying their loans. If not, they have assets that can be liquidated.
I have 300 EUR stuck in a Baltic Forest loan, which is temporarily banned from the secondary market. In the meantime I’ve decided to sell my Viru Halud OÜ (II) loan – they operate in the same market as Baltic Forest, and seem to be exposed to the same risk.
This is a time of trial for Crowdestate: If they manage to recover the bad loans, they will come out the other side stronger. Otherwise, they will lose investor trust.
Six loans were published this month, most of them tiers of existing projects, but also one new borrower. All of the loans offer between 17.5% and 20% interest, maintaining Envestio’s status as a great secondary platform for high-risk, high-reward projects.
I find their continued success to avoid defaults amazing. It also gives hope that when a default does occur, their provision fund will be able to cover it.
Business as usual on Lenndy: A lot of lates but no defaults. Late payments keep my XIRR since joining the platform at around 10.43%, instead of the expected 12%.
I withdrew some of the loan repayments this month, because no new loans were offered by SimpleFin, and my stake in the other two originators is high enough.
If I held a “platform of the month” contest, this month EVO would be the winner. First, several Skin in the Game projects were listed, so there was plenty in which to invest. My monthly return seems low, but that’s because many of the projects will only be repaid upon completion.
Second, remember I told you last month that EVO plans to offer unique investments in real estate funds? I thought it was going to take months to come true. Guess what? Two weeks later I get an email that the first opportunity of this type was just listed.
Then, some other day, I’m having a chat with Gustas about their planned interface changes. A week later, the new interface is already online!
Don’t get me wrong, EVO still requires a lot of development, and some of their originators still need to prove themselves. Still, it’s incredible how quickly this platform progresses. And while I can’t give details, I can say that another big thing is about to happen that will help advance the platform.
After some consideration, I’ve decided to add PeerBerry to my portfolio. To be honest, I feel like I’m starting to lose myself with too many platforms, but at the same time I could no longer throw money at the a few shitty Mintos originators which are the only ones to offer decent returns.
PeerBerry presents interesting diversification, but I can already see that tracking my portfolio there is going to be a nightmare. The “My Investments” page does not offer any representation of portfolio diversification. Different originators have different levels of affiliation with Aventus group, which provides a buyback guarantee to some of them. Each originator is also referred to by different names on different pages of the website – what the hell.
I think PeerBerry should make it a top priority to make the interface clearer and more informative with regards to these topics.
For the first time since its establishment, Fast Invest has officially announced the addition of a new loan originator and provided its name: Kviku.
Sadly, Kviku also seeks funding on several other platforms, which gives the impression of a rather desperate company wiling to work with anyone – and also makes their performance more difficult to track. Still, this is finally a step in the right direction for Fast Invest.
I also feel that the risk/return balance has changed from a few months ago. Today, the solid 13% returns with 3-day buyback guarantee offered by FI are almost unparalleled. So I’ve decided to give them another chance and deposit a bit more, in hopes of seeing further improvements.
This month I earned €105 referral income from Envestio, €64 from Grupeer and €30 from EVOEstate. Thank you guys.
These figures are nice, but not as impressive as the last two months’. My personal spending was also a lot higher than usual as I spent the month abroad, so I won’t make a donation this month.