By way of an update and including the most recent monthly loan cohorts performance, the IRR for lenders since July 2018 is now 10.7% per annum. No subjective assumptions are made in this IRR calculation as to the final repayment amount of a loan or default rates. This is the IRR as at 1 July 2019 on loans written from July 2018 to March 2019 i.e. all loan cohorts that have been through their full contractual repayment schedule.
We are still receiving payments on some of these loans through payment plans, so the picture should get better because the IRR is calculated based on cash received to date. The IRR is a little lower than reported to this Forum in May (11.3 % p.a.) but some volatility is to be expected in all loan books. This is all encouraging, providing consistent returns to our update in May 2019.
Remember also that Capital is at Risk and there is no FSCS protection when lending with The Money Platform. The full risk statement can be found here,themoneyplatform.com/lender-risks . Our current IRR is currently better that our target rate of return.
For the non accountants among us, does this mean if I had invested in every single loan from July 2018 until July 2019 I would have made at least 10.7% ?
It's an annualised figure, not the actual returns of the loans from July 2018 to March 2019.
The period of investment to date doesn't allow for a 12 month investment performance period. So the actual returns are extrapolated to 12-months as calculated by the MS office excel formulae IRR using the cash flows of the loans written within July 2018 to March 2019. So if you'd invested in every loan within this period the IRR would have been 10.7%, however the investment performance period is less than 12-months and so you're actual cash return would be proportionally lower.