My Bondmason Result After Exit – Yield was Mediocre

Last year in September I signed up at UK platform Bondmason in order to test first-hand how an investment of 1,000 GBP would develop. As described in the review article, I wrote when I started, Bondmason is an aggregator that automates the investment across many p2p lending platforms for the investor and takes a fee for that. Bondmason projected a target return of 7% after fees and bad debt.

Allocation of my deposited funds into loans went okay. There was some cash drag, but not as much as other investors have experienced.


Deployment speed of my investment on Bondmason – click for larger image

What was bad, was that it became clear to me, that the interest level in combination with the non-performing loans would make it very unlikely for Bondmason to reach the projected return – at least for my portfolio. Especially with the Invoice Discounting loans there were issues.

In April 2017 Bondmason announced it would require a larger minimum investment amount of 5K (previously 1K) and raise fees for small portfolios to 1.5% (previously 1%). Dang. I was in no way interested to deposit more money. So my portfolio did not even get to celebrate 1st anniversary. In July I gave them notice to liquidate my portfolio/account. Since then I withdrew 1,013.94 GBP – only slightly more than I deposited. My account still exists as there is 20 GBP stuck in two property loans in default and also 1.41 GBP in cash.


My Bondmason result (1) – click for larger image


My Bondmason result (2) – click to enlarge

Regardless of which way I look at it, the result is clearly bad. Obviously Bondmason by far missed the targeted return of 7% in my case.
If I take an optimistic view and just assume, my 2 defaulted loans would recover today and the outstanding amount is paid to me, then my self-calculated yield (XIRR function) would be 4.3%. If I need to write off the 2 loans in default then my self-calculated yield is 1.9%. And that is before tax – as a German resident I cannot offset bad debt against interest earned for tax purposes. And on top of that the pound has been detoriating against the Euro value in the past 12 months (not Bondmason’s fault).

So to sum up: I liked the idea of an aggregator and the Bondmason setup allows passive investing in a diversified mix of p2p loans. But my returns are among the worst I ever experienced on p2p lending platforms and I am certainly happy I conducted this test with 1,000 GBP only and did not risk more.

If you want more details about the development of my portfolio throughout the past year there are more snapshots with screenshots over time in this thread.

 

Fellow Finance Now Offers Loans to German Borrowers

Peer-to-peer lending platform Fellow Finance is now open for borrowers in Germany. Wirecard Bank supports the Finnish FinTech company Fellow Finance to enter and provide a digital infrastructure for the German financial market. Wirecard Bank will place their German full banking license at the Fellow Finance’s disposal and in addition enabling a completely digital credit process.

Under German regulation (KWG) only banks are all allowed to make loans, meaning all p2p lending platforms need to partner with a transaction bank.

It is not a full p2p lending offering as investors cannot invest into the German loans on the platform. And Fellow Finance states in their TOC that they do not advise borrowers regarding the loans. So it looks to be an attempt to capitalize on the reach of the brand. The website for the German market is running on the national domain Fellowfinance.de.
Update: While the German website explicitly states that retail investors cannot invest, the wording might be misleading and actually might mean only that investors need to go through the Finnish site in order to invest. On the Finnish site the ability to filter for German consumer loans and to set up allocators (autoinvest) for German loans is present.

Jouni Hintikka, CEO at Fellow Finance, says: “We are looking forward to working with advanced Wirecard Bank as a co-operation partner in the future. We are proud of the entry into the German market after having already proven our business model in Finland and Poland. This is again one step of making Fellow Finance the biggest consumer and business lending platform in Europe and proves the scalability and flexibility of our platform.”

Thorsten Holten, Executive Vice President Sales Financial Institution and FinTech Europe, adds: “Gaining Fellow Finance as a customer means that we can expand on our collaboration in the area of alternative lending with the aid of an international partner. With our expertise in the areas of banking and regulations, we help FinTech companies such as Fellow Finance to enter the market in the best way possible as well as to quickly and easily internationalise their business.”

In future, Wirecard Bank will support Fellow Finance in the scoring of potential borrowers and carrying out payment transactions. This means that end consumers in Germany will be able to quickly apply and raise a loan in competitive interest rate.

The German market is very competitive and so far p2p lending marketplaces have found out it is not easy to compete with the banks. In Germany Auxmoney is the largest p2p lending marketplace offering consumer loans.

International P2P Lending Volumes August 2017

The table lists the loan originations of p2p lending marketplaces for last month. Funding Circle leads ahead of Zopa and Ratesetter. The total volume for the reported platforms adds up to 391 million Euro. I track the development of p2p lending volumes for many markets. Since I already have most of the data on file, I can publish statistics on the monthly loan originations for selected p2p lending platforms.

Milestones reached this month are:

  • Bondora reaches 100 million Euro in financed loans since launch

Investors living in national markets with no or limited selection of local p2p lending services can check this list of international investing on p2p lending services. Investors can also explore how to make use of current p2p lending cashback offers available. UK investors can compare IFISA rates.

Want to meet representatives of many of the listed companies? Attend Lendit London in October -use discount code WiseclerkVip to get a 15% rebate on registration.

P2P Lending Statistic August 2017
Table: P2P Lending Volumes in August 2017. Source: own research

Note that volumes have been converted from local currency to Euro for the purpose of comparison. Some figures are estimates/approximations.
*Prosper and Lending Club no longer publish origination data for the most recent month.

Notice to p2p lending services not listed: Continue reading