New product: Mintos Invest and Access – What it is and My Opinion

Mintos will launch a new product offer called Invest & Access tomorrow. It was already unveiled and presented at the P2P Conference in Riga on Friday. Before I write about it watch the video below for about 10 minutes with Mintos CEO Martins Sulte explaining Mintos Invest and Access.

invest and access presentation riga
the video should autostart at the right point. If not it is at 2:29:22

The new offer makes it super-easy for investors to invest and automatically diversify through a very wide selection of loans. Mintos does that by investing the money in all loans on the platform that carry a buyback guarantee and are from originators that are at least 6 months on the platform. Mintos promises that investors will be able to cash out easily (subject to market demand) instantly, saying investors don’t need to bother about handling the loan selling on the seondary market. Mintos does that by selling the non-late loans to other investors.

The investor can still see how the portfolio he holds is composed on an overview page. One important aspect for the market dynamics on Mintos marketplace is that Invest & Access will invest before the autoinvests.

Mintos is cleary aiming to make it easy for new investors that don’t want to spend much time thinking about the investment and optmizing yields by giving them the average yield by just one click. The Invest & Acesss page will show the weighted average interest rate, which at the time I saw that page was showed as 11.98%. But the figure will change and update as market conditions fluctate and as the FAQ says it is not guaranteed.

One important point in the FAQ/footnotes is that the ‘instant access’ only applies to current loans. That means if the investors has e.g. 15% late loans, that would mean that he gets only 85% as instant withdrawal and for the remaining 15% has to wait until either the loan is bought back by the buyback or becomes current again (I suppose in that case the investor could trigger another cashout).

Investors can runs both Mintos Invest & Access as well as the existing autoinvests, should they which, but in that case Invest & Access would use any available cash the investor has first, therefore I would guess that there are rarely any funds left for the autoinvests to use.

My Opinion on Mintos Invest and Access

Mintos clearly offers a product that makes it as easy as possible, lowering the entry hurdles especially for new investors. And as Bondora Go&Grow shows there is a high demand by investors for simplified products. Statistics published by Bondora show that in April 2019 63% of the new investments in that month where conducted via the Go&Grow product, which is constantly gaining over the other investment methods Bondora offers. Other examples are the Access products offered by British Assetz Capital.

Looking at it from the perspective of an investor that is a little more experienced and willing to spend a little time Invest & Access does not seem an attractive offer. By definition it offers the weighted average interest rate.

By setting up own autoinvests at Mintos, keeping a good diversification and foregoing the highest risk, investors can currently achieve about 13-14% yield on Mintos. So if they would instead use the new product they would have about 2-3% lower yield, and have actually less control on which originators they invest in. An important point to consider, is that the value Mintos shows you, is the average interest rate, NOT the expected average yield. The yield will be significantly lower than the interest rate as Mintos will include buyback loans from originators with long grace periods or originators that do not pay interest income on delayed payment. Excatly those are typically avoided when investors configure their own autoinvests.

And concerning the argument of liquidity. Mintos is very liquid anyway. Without using the new product it is no problem to liquidate a portfolio within a few minutes to  a few hours it just depends on the price. Sure you might have to offer a discount. Maybe depending 0.2%-0.6% on average. But that is a small price if you had the higher yields before.

So would I recommend using Invest & Access over the ‘traditional’ way of setting up own autoinvest? There is one use-case I would. If an investor wants to invest very short-time (for whatever reason ‘parking’ money) for less than say 120 days, than it is worth considering.

In my opinion on why Mintos launched the new product, there are actually two reasons:

  1. there is demand for a simplified product and this new product shall satisfy that
  2. the new product will help on the sales site for attracting and onboarding new orignators. Originators that can only offer rates that are below the average interest rate on the Mintos platform so far were hard to sell. With Invest & Access they will be just part of the bundle and automatically sold (once the originator has been on the platform 6 month)

That brings us to an interesting point. How will Mintos Invest & Access the market dynamics? The big factor here is that Mintos Invest & Access happens BEFORE autoinvest and manual investment. There are already (even before launch) speculations and fears of investors that it might bring down interest rates or ‘force’ them to use the new product to avoid cash drag, but I think it is much to early to make any prediction what might be the outcome. But I sure am curious what this will do to the activity on the Mintos marketplace.

What are your opinions on the new product? Please share them in the comments. Thx.

mintos invest and access

P.S.: The following interview with the Mintos CEO was recorded just before the announcement of the new product, therefore it does not cover Invest and Access – but it has a lot of information on the current state of Mintos.

(Source: Bernhard Hummel)

Review: My P2P Lending Portfolio May 2019

I covered my p2p lending portfolio periodically over the past 12 years in this blog. The following report is a snapshot on how it is composed right now (May 2019) and which strategy I will take for the next months. As you can see below I aim for a widespread diversification (over different platforms as well as geographically) of my p2p lending investments.

Mintos

Mintos is my biggest position. I run a trading strategy on Mintos. Mintos gives my net annual return as 15.1%. Calculating it myself based on the deposits and withdrawals I get a XIRR value of 24.8%. The cause for the huge discrepancy is that Mintos does not account correctly for the cashback of the campaigns. I heavily traded, when Mogo ran a campaign. For example I invested in new Mogo loans that were offered with a 2% cashback on the primary market, nearly instantly sold them with 1.8% discount on the secondary market and pocketed the cashback. Rinse and repeat.

Mintos net annual return

I am satisfied with the current degree of diversification over loan originators in my Mintos portfolio. The bulk of my investments is in loan terms between 3 and 30 months at interest rates ranging from 13% to 15%. The lower interest rate loans are usually only held temporary as part of my trading strategy.

mintos portfolio originators

For the coming month I plan to keep my Mintos investment at roughly that amount, reinvesting the paid principal and interest.
New investors registering via this link at Mintos, get 1% cashback on amounts invested in the first 90 days. Mintos is currently not accepting UK investors.

Linked Finance

My second largest p2p investment is on Irish SME loan platform Linked Finance.

linked finance portfolio

Diversification achieved is good. The majority of my loans have interest rates between 8% and 11%. Most loan terms are 2 or 3 years.

linked finance portfolio diversification

I “collected” 7 loans in default (double dip on the golf loan). But 5 of these had repaid more than half the principal before they want into the default state so the principal in default sums up to only 270 Euro. My self-calulated XIRR value is 6.4% if I totally write off the amounts in default and 7.1% if I assume that half the amount in default will be recovered. I plan to slightly increase my Linked Finance portfolio in the next months. Linked Finance is not offering any cashback or bonus rewards for new investors.

Bondora

Bondora is my third largest and oldest (still running) p2p lending portfolio. I started in 2012. My self calculated XIRR value is 16.6%. A yield that high is not achievable nowadays anymore. My portfolio profited heavily from the first years when interest rates were typically 28% to 34%.

bondora portfolio profitability

I am currently investing into Estonian A and B loans using these autoinvest settings. I have used these settings unchanged for 11 months now and it is running totally hands-off with no maintenance required.

bondora portfolio pro autoinvest

On Bondora I reinvest the bulk of my repayments and occasionaly withdraw some funds. New investors registering on Bondora using this link get a 5 Euro sign-up bonus.

Ratesetter Australia

Ratesetter Australia is my fourth largest p2p investment and also one of my youngest. I started in August 2018. My XIRR value self calculated in AUD is 9,1% if I include the 75 AUD sign-up bonus and 7.4% if I do not include that.

ratesetter australia account

My money is mostly invested on the Ratesetter 5 year market at an average rate of 9.2% (that is after fees but before withholding tax).

ratesetter australia loans

In the past months the interest rates have dropped considerably therefore I am parking some funds on the 1 month market or invest them on the 3 year market.

ratesetter australia rates

I am reinvesting all repayments at Ratesetter Australia. If rates go up again I plan to do that on the 5 year market, otherwise I’ll settle for the 3 year market. It is a little complicated to register as a non-resident, but I have described how I managed to sign up as a European here. New investors can earn a 75 AUD promotion bonus by investing 2,000 AUD or more in our 3 year Income or 5 year Income lending markets before 31st May 2019. Achieving that requirement in time will not be easy, even if you start directly.

Iuvo Group

The fifth largest position of my p2p portfolio is invested at Iuvo. It is running hands-off and does not require any maintenance.

iuvo group portfolio

I continue to reinvest all repayments. Iuvo pays new investors a very generous cashback of up to 90 EUR. For more details and how to get it see the cashback overview page.

Estateguru

estateguru portfolioAfter I completely exited Lendy in last autumn, baltic Estateguru is now my largest platform for property secured loans. I don’t use the autoinvest. Instead I periodically login and manually invest into a new Estonian loan secured by a first rank mortgage.

I mostly reinvest all repayments. New investors get 0.5% cashback for all investments in the first 90 days, if they sign up using this link.

Fellow Finance

I used to have a larger portfolio at finnish Fellow Finance but I did not want to go below 12% for 4 star Finnish consumer loans therefore I started withdrawing funds last year. In January the sale price collections paid tor Finnish loans dropped from 70% to 53% which reinforced my decision to exit.

fellow finance portfolio

October

I am running down my portfolio on French SME loan marketplace October. With the low interest rates and rising defaults (6 out of 52 loans) in my portfolio the risk reward ratio is not for my taste anymore.

october loan portfolio

New investors signing up on October using this link can get 20 EUR bonus (200 Euro minimum investment)

More p2p lending marketplaces

Due to professional interest (want to gain first hand experience) and curiosity I have more p2p lending portfolios at Ablrate (small, reinvesting), Assetz Capital (tiny, reinvesting, possibly increasing), Bulkestate (tiny, testing), Crowdestate (small, reinvesting), Finbee (tiny, nearly exited), Investly (small, reinvesting), Lenndy (tiny, watching), Monestro, (tiny, exiting), Moneything (small, exiting), Neofinance (small, testing, probably running down), Reinvest24 (small, testing), Robocash (small, reinvesting), Zlty Melon (tiny, exiting next month when terms are up).

Crowdinvesting

Not p2p lending but investing in startups. I am a huge fan of Seedrs. Investing in startups is of course even higher risk than investing in p2p lending. Nevertheless I went ahead and built a big Seedrs portfolio over the last years. Snapshot:

seedrs portfolio

P2P Conference Riga

I am looking forward to be at the P2P Conference in Riga which is less than 4 weeks away. The conference is reasonably priced (enter promotional code P2PEARLYBIRD40 for 40% rebate) and Riga can be reached with cheap flights from many European cities. BTW, Riga is an interesting town, if you have not been there yet you could combine the conference with some sightseeing.

Why has the FCA Refused the Application of Mintos and has the Decision any Consequences?

The FCA, the Financial Conduct Authority, is the supervising regulatory body for p2p lending platforms in the UK. In Dec. 2018 it refused the application of Mintos or more precise of a separate legal entity within the Mintos group, established for operations within the UK.

The full notice of the FCA decision can be read here. Below I outline some of the aspects. I also reached out to the Mintos CEO, who kindly answered my questions on this matter.

Before we go into the details, I want to make it clear, that the FCA decision has no direct impact on the current operation of  Mintos platform, which is headquartered in Latvia.

Mintos Marketplace Limited applied for permission to conduct a specific regulated activity (“permission to operate an electronic system in relation to lending (Article 36H RAO)”).

Reading the FCA decision there are several points that led to the refusal:

a) the applying company does not currently meet the minimal funding requirements of 50K GBP as specified by the rules (paragraphs 49-50 of the notice)

b) the head office of the applying company is not currently in the UK (51-53)

c) the FCA has doubts that the Mintos business model will be adapted adaquately to comply with the UK regulation rules (paragraphs 29-33, 35-38, 40)

d) the FCA find Mintos wind-down plans are not specific enough (41-44)

e) the FCA is not satisfied with Mintos’ understanding of the UK rules (46-48)

The decision is interesting to read. Naturally it judges Mintos solely by the formal compliance regarding the UK rulebook. Any other non-UK marketplaces seeking FCA approval can certainly learn some things from this declined application. As I stated above, it does not have any consequences for the current operation of the Mintos marketplace. It only affects any potential plans Mintos had for the UK market.

That gets us to the more interesting point: why did Mintos strive to get FCA approval still in 2018 despite Brexit? I asked Martins Sulte, CEO of Mintos, and here are his answers:

1) What was the intention of Mintos to set up the seperate UK entity and apply for permission at the FCA. Was this related to offering IFISA products and possible tax advantages for UK investors?

The intention is to connect to our marketplace loan originators originating loans in GBP in the UK and offering those loans to investors from the UK. We believe that the UK can become a self-sustaining marketplace where local investors are able to fund loans originated locally in the UK.

2) Considering that the application was pursued still as recent as July 2018 (point 29), this is an interesting move in light of Brexit, with several UK fintechs going the other direction to secure a continued presence in the EU. Any comment?

We view the UK market as a separate market that has the UK specific regulatory environment when it comes to crowdlending. Our intention is to create a largely self-sustaining UK marketplace that serves both UK loan originators and UK investors. In that light uncertainty caused by Brexit plays less of a role. It is important to note that each and every country has their own approach to regulating crowdlending, which means that for instance having the FCA permissions for working in the UK would not really affect our operations in other countries, even in EU. Only when the European Commission’s proposal for a regulation on European crowdfunding services providers come into place we might see that licenses are passportable across the EU and then in that light, the Brexit certainly would more of a consideration. For now, we have to look at each country separately.

3) Is the announcement of the application for an e-money license a reaction to the upcoming decision by the FCA?

No. E-money licence and UK permissions are very different licenses.

4) Do you think that any of the assessments the FCA made, will be relevant for the Latvian regulator once the Latvian regulation is finalized?

I don’t think so. Each country has its own approach. The UK has a rather specific approach. When we talk about Latvian regulation we also have to take into account that it will cover only investors and loan originators in Latvia. Once the Latvian regulation is finalized we will still have to look at each country separately. Us having a necessary license in Latvia will play a little role when considering our operations in, for example, Mexico, South East Asia or Russia, or even in other countries of EU.

 

Martins added: ‘This was a formal Financial Conduct Authority (FCA) decision on Mintos’ application for operating in the United Kingdom submitted by the Mintos Marketplace Ltd (a separate legal entity within Mintos group that was established for operations in the UK). The application was submitted almost two years ago. In these two years, our business model has evolved, our team has expanded significantly and we have gained major business results on a European and global level that defined our position as a leader in the market of investments in loans. The application for necessary permissions to operate in the UK doesn’t affect our daily business and the future development of Mintos, and the rejection of the application is nothing that can, nor will, affect our business operations in other countries.

The UK has different and specific legislation, and the FCA notice serves us as valuable feedback for adjusting our processes and procedures to fit the UK specificities. At the moment, we are in no rush when it comes to entering the UK market, as we are all aware of the many uncertainties regarding the Brexit issue. Anyway, our growth and expansion goals are unwavering, and entering the UK market will remain in the scope of our interest. We will continue working with our legal and regulatory advisors and will take into account the FCA’s feedback when considering our next steps with respect to the UK.’

Year-End Review of my Mintos Results in 2018 and Outlook for 2019

I started investing on the p2p lending marketplace Mintos in January 2015. Nearly 4 years have passed. Most of the time my strategy was buy-and-hold, that is I invested in loans with the intention to hold them till maturity. That’s also what I had been doing at the majority of other p2p lending platforms. In the beginning of the year I had a large chunk of high-interest, longer-term Mogo car loans, together with some mid/longer-term loans of other originators on Mintos. After many of the Mogo loans were bought back in summer I decided to switch to a completly different strategy on Mintos. Thereafter I concentrated on trading, that is buying loans on the secondary market and selling them at a higher price on the secondary market again, usually holding these loans only for a short time frame.

When Mintos introduced the Secondary Market Autoinvest Feature in October my strategy got a boost.

So how did it go?

Mintos Account Statement
Summary of my account statement for 4th quarter 2018 – click on image for larger view

As you can see in the screenshot above I made 712.80 EUR profit from trading (buying and selling) loans in the fourth quarter. Compare that to the 127.14 EUR (101.74+25.40) interest earned. Obviously trading has been much more profitable. I consider it not much riskier than my previous buy and hold strategy as I was able to maintain a reasonable level of diversification over several investors. But of course investing on Mintos is high risk anyway.

Which loans did I select for trading?

It all comes down to buying cheap and selling at a higher price. My experience is that this works best with mid-term, EUR BB loans. With short term or very long term loans the impact of premiums und discount is to high / to low on the YTM for a good turn-around of inventory.

Below is a snapshot of the loans currently in my Mintos portfolio today – of course the composition changes very frequently with this strategy. It can be observed that loan ranges between 18 and 42 months dominate my portfolio, which consists of 478 indiviudal loan parts. Also loans with 13% and higher interest rates are overweighted.

Mintos Account Statement

This trading strategy worked very well for me in the past quarter. It would probably not scale, if an investor tried to deploy much more capital, as loan supply that matches my criteria for buying is limited and competition is increasing.

The Net Annual Return (NAR value) Mintos displays for my return has been constantly increasing this quarter and today is at 14.74%. Remember this is calculated for the whole time since I started investing, so since January 2015. If I would calculate this figure only for this quarter results, it would be much higher.

Net annual return Mintos
Screenshot Dec. 28th, 2018

So what to expect in 2019?

Interest rates on Mintos have been fluctating over the past years. In the last months they have risen considerably. Possibly a seasonal effect. I have no idea whether they can rise a little further still, or have peaked and will fluctate back in the other direction for a few month. Also the economic cycle might turn.

I will stick to my buying and selling strategy for now and for this strategy supply and demand on the secondary market is much more important than whether the interest rates are 1 or 2% higher or lower as most of my result is generated from secondary market gains rather than interest earned.

Also I am acutely aware of the risk that the huge number of originators pose. Even if Mintos does a good job of vetting and monitoring the originators, the sheer number of originators statistically means that chances that one of them might get into financial trouble are not neglectabe. For indivual investors the only viable measure to have some protection (and to reduce losses in that case) is diversification across several originators.

I do hope that 2019 will be a very profitable year for Mintos investors!

New investors signing up via this link on Mintos, get 1% cashbark on all investments they make in the first 90 days after registration.

Mintos to Provide Debit Cards and IBAN Accounts to Investors

Mintos LogoP2P lending marketplace Mintos has raised 5 million EUR in a Series A. The money is earmarked to provide new features for investors.

Mintos will be magnifying its role in the financial services sector by adding personal IBAN accounts and debit cards to its established global lending marketplace in the near future. The IBAN personal accounts will give investors the ability to make and receive payments from around the world, including receiving a salary directly to their Mintos account. Meanwhile, the Mintos card will allow investors to make transactions around the world or online and withdraw money at ATMs.

This will be made possible by the e-money licence Mintos is applying to receive. As an Electronic Money Institution, Mintos will protect money held by investors under the European PSD2 legislation.

Martins Sulte, Mintos CEO and co-founder: “Providing customers with a personal IBAN account and debit card will mark a major leap in our services and significantly improve the user experience. Soon, everybody with their own IBAN accounts will be able to give the account details to their friends, companies or customers to get paid, to pay using a debit card, and to continue using Mintos for investing in loans around the globe and earning great returns. Our upcoming mobile app will make it even more convenient.”

The fintech startup has a fast-growing customer base of 87 000 investors from 71 different countries, with plans to open doors to more users in additional locations. With 100 000 registered investors forecasted by the end of the year and 300 000 by the end of 2019, Mintos will be focusing efforts on investor acquisition and expanding to additional global markets. To accomplish this, Mintos plans to significantly invest in doubling the size of its team.

The 5 million EUR series A funding comes from existing investors Grumpy Investments (previously, Skillion Ventures), Riga based venture capital firm that is focused on investing in technology companies.

Clearly Mintos attempts to position itself away from a pure investment offer to a broader financial service.

Configuring the new Mintos Secondary Market Autoinvest for a Test

Mintos has announced a new feature – the autoinvest can now be used to buy loan parts on the secondary market too. I am setting up a new autoinvest to test it and am curious how many loan parts I will be able to acquire with this new feature. Just like on the primary market there are many selections adjustable.

Mintos Auto Invest Secondary market
Screenshot Mintos Auto Invest Secondary Market

Mintos will roll out the new feature to all investors on Dec. 3rd. Only selected investors will be unlocked earlier. Mintos says investors can deposit an additional 5,000 EUR to add to their balance to get early access. Also investorswhich have invested at least 50,000 EUR will have early access.

Mintos Auto Invest Secondary Market Details
Screenshot: Further details of Mintos Auto Invest Secondary Market

For the further details of the test, I set the secondary market auto invest to buy loans with at least 10% YTM, a maximum loan term of 30 month and at least 0.5% discount. I left the interest rate open, as the restriction is not really necessary for me in this case in conjunction with the YTM and the discount.. For ‘Do you want to reinvest’ and ‘Include loans already invested in’ I choose ‘Yes’. I deselected ‘Diversify across loan originators’ as I want to buy all loans that match these conditions.


No surprise – no loans match my selection. Loans with these criteria selected by me have been bought up fast in the past, even before the introduction of this new autoinvest. I do wonder, which investor will get priority in case there will be autoinvests of multiple investors matching a new loan up for sale. I expect this new autoinvest will be a popular feature amongst Mintos investors.

Not many but a few other p2p lending platforms offer autoinvests for their secondary markets too.