Performance report for 2022 (and quarterly updates in 2023)
Dec 30, 2022 20:03:11 GMT
aju, Mousey, and 11 more like this
Post by Ace on Dec 30, 2022 20:03:11 GMT
My 5th year of P2P investing is drawing to a close. Here's how it went for me.
2022 has been a steady year for me, with one large bump in the road: ABLrate. Other than that, it was a year of consolidation. My all time XIRR fell very slightly from 7.47% to 7.42%. As always, these figures exclude accrued profits that haven't yet been paid. This means that the figures are still likely to be understated due to the large number of bullet loans, including quite a few new ones, that are yet to repay. Total funds in my P2P portfolio rose by about 10%, partly due to natural growth and partly due to some added funds from matured bonds.
The expected rise in my XIRR didn't happen. The overwhelming driver for this was the ABLrate wind-down. At the point of announcement ABLrate was my largest platform at about 17% of the portfolio (was as high as 19% before that), and was easily my largest income producer. It's still my 2nd largest platform at 13%, but is now producing virtually no income. What happens with my outstanding capital there could have a big impact on my portfolio XIRR for many years to come. The outstanding capital equates to 65% of my all-time P2P profits! The underlying expected average return rate on my target platform mix is around 11%. Whether my XIRR rises or falls next year is likely to be heavily influenced by whether I suffer losses or receive repayments from ABLrate. I'm expecting some of each, but I'm not clever enough to put any estimate on the balance between the two.
For the first time in the 5 years that I've been investing in P2P, my P2P portfolio has trounced my S&S portfolio (mainly global index trackers), which are down around 10% this year. The P2P portfolio is now ahead on the 1, 2, 3 and 5 year terms, though the 5 year returns are very close. I'm very happy with my roughly 50/50 split between the 2 portfolios. The remarkably smooth returns from P2P are an obvious contrast to the massive swings in my S&S portfolio. The stable income from P2P is working well in proving income to live off of, though this will need to be tempered with whatever the fallout from the ABLrate wind-down turns out to be.
I'm very happy with my decision to replace traditional bonds in my portfolio with P2P and to increase that allocation to 50%. I believe that this has reduced my overall risk and volatility while increasing my long term returns. It's certainly much more fun for me.
Now for the table...
All accounts have been running for between 4 and 5 years except where stated.
As for last year, I'll give one combined figure for each platform. The previous year's figures can be found in last year's update here. Again, all XIRRs now include referral bonuses and cashbacks. They exclude accrued interest unless stated otherwise. For those not familiar with XIRRs (eXtended Internal Rate of Return), they are an annualised return measure, similar to the APRs for borrowing and AERs for saving, to allow an easy direct comparison between platforms. Why the FCA mandate the use of APR and AER but not XIRR is a particular annoyance of mine. (I note that Kuflink is taking advantage of this by quoting unattainable rates, but I digress...)
Note that the newer a platform is the more understated its results will be due to having had fewer loans mature, especially so where they charge upfront fees and/or use bullet loans.
My strategy for the last year was (with how it went in blue):
Move as much as possible from non-ISAs to ISAs. (Some, but quite a few of my preferred loans didn't have ISA options.)
Put this year's remaining ISA allowance in a cash ISA then split it into multiple IFISAs in the new tax year. (Yes)
Keep a single platform limit of 20% of p2p portfolio. (Yes. AxiaFunder is currently highest at 13.3% of portfolio.)
Liquidate underperforming platforms and non ISA wrapped investments as and when cash is required. (Yes, but on going: added ABL, AC, AE, LW, MT and PP as platforms to withdraw from.)
Maintain a number of rolling withdraw requests in Loanpad to fund any extra unexpected cashflow needs. (Yes)
Take advantage of cashback offers, but don't be blinded by them. (Yes)
Try not to be tempted by new platforms (I have too many already, but a few are in wind-down). (Failed, I have 2 new platforms. However I have fully exited 10 platforms and reduced 8 more to less than 0.1% of portfolio each. 19 platforms have > 1% of portfolio each.)
Reinvest maturing loans if cash is not needed. (Yes)
Keep reading P2PIF and exit platforms earlier rather than later if it looks like they're in trouble. (Ongoing)
Raise my average overall XIRR from this years 7.47%. (No. Now 7.42% due to ABLrate wind-down)
Arrange for at least 4 loans totalling at least £5k of maturing funds per calendar month for at least 12 months ahead. (Almost. It worked well for last year. 4 months are currently a little short for next year, but hopefully the months with extra loans maturing will fill in any gaps. I also have 31 loans across 9 platforms totalling £44k that are running late which should fill in some gaps. LP can also be used to plug gaps and various platforms have SMs that could also come to the rescue. I also have lots of amortising loans from the likes of Qardus which helps if cash is needed)
My strategy for 2023:
Keep going with last year's strategy.
Lower platform limit to 15% of portfolio (but allow AF to go up to 20% when using portfolio loans as they are internally diversified)
Raise my average overall XIRR from this year's 7.42%.
Invest in more AxiaFunder portfolio loans to generate a regular high-rate income.
Good luck in 2023 everyone. Please feel free to ask questions or add your own reports to this thread. I very much enjoy reading about how P2P is working for others.
2022 has been a steady year for me, with one large bump in the road: ABLrate. Other than that, it was a year of consolidation. My all time XIRR fell very slightly from 7.47% to 7.42%. As always, these figures exclude accrued profits that haven't yet been paid. This means that the figures are still likely to be understated due to the large number of bullet loans, including quite a few new ones, that are yet to repay. Total funds in my P2P portfolio rose by about 10%, partly due to natural growth and partly due to some added funds from matured bonds.
The expected rise in my XIRR didn't happen. The overwhelming driver for this was the ABLrate wind-down. At the point of announcement ABLrate was my largest platform at about 17% of the portfolio (was as high as 19% before that), and was easily my largest income producer. It's still my 2nd largest platform at 13%, but is now producing virtually no income. What happens with my outstanding capital there could have a big impact on my portfolio XIRR for many years to come. The outstanding capital equates to 65% of my all-time P2P profits! The underlying expected average return rate on my target platform mix is around 11%. Whether my XIRR rises or falls next year is likely to be heavily influenced by whether I suffer losses or receive repayments from ABLrate. I'm expecting some of each, but I'm not clever enough to put any estimate on the balance between the two.
For the first time in the 5 years that I've been investing in P2P, my P2P portfolio has trounced my S&S portfolio (mainly global index trackers), which are down around 10% this year. The P2P portfolio is now ahead on the 1, 2, 3 and 5 year terms, though the 5 year returns are very close. I'm very happy with my roughly 50/50 split between the 2 portfolios. The remarkably smooth returns from P2P are an obvious contrast to the massive swings in my S&S portfolio. The stable income from P2P is working well in proving income to live off of, though this will need to be tempered with whatever the fallout from the ABLrate wind-down turns out to be.
I'm very happy with my decision to replace traditional bonds in my portfolio with P2P and to increase that allocation to 50%. I believe that this has reduced my overall risk and volatility while increasing my long term returns. It's certainly much more fun for me.
Now for the table...
All accounts have been running for between 4 and 5 years except where stated.
As for last year, I'll give one combined figure for each platform. The previous year's figures can be found in last year's update here. Again, all XIRRs now include referral bonuses and cashbacks. They exclude accrued interest unless stated otherwise. For those not familiar with XIRRs (eXtended Internal Rate of Return), they are an annualised return measure, similar to the APRs for borrowing and AERs for saving, to allow an easy direct comparison between platforms. Why the FCA mandate the use of APR and AER but not XIRR is a particular annoyance of mine. (I note that Kuflink is taking advantage of this by quoting unattainable rates, but I digress...)
Note that the newer a platform is the more understated its results will be due to having had fewer loans mature, especially so where they charge upfront fees and/or use bullet loans.
Platform | XIRR to end 2022 | Notes |
---|---|---|
ABLrate | 9.41% | Now in wind-down. See discussion above. I just can't guess where this will end up. I was impressed with how much capital ABLrate managed to retrieve from bad loans in the past, but they clearly have much less incentive to do so now. A third of my outstanding capital is profit, and I'm fairly sure that the remaining PeaOne loan will improve the situation for me, but as for the rest... |
Assetz Capital | 9.07% | Now in wind-down. I've been withdrawing for some time now. See here for details. I'm expecting an OK final outcome of somewhere around 6.5%. It was fun, but not a great return for the amount of effort I spent. |
Assetz Exchange | 10.81% | New in Sep 2019. I feel that I was exceptionally lucky to get in early here as much of my profits are due to increased premiums between me buying and selling. I sold off around three quarters of my loans to lock in those premiums. I found it mentally difficult to stay invested when the premiums plus buying and selling costs/fees could easily wipe out 10 years worth of income, which would have left me solely reliant on the property price for any gain if lenders voted to sell after a 10 year lease. I understand that premiums have reduced now, so this should be less of a problem. Yields would be ok, at around 5% to 6%, if the properties are perpetually leased, which seems more likely now that the platform has pivoted from traditional buy-to-let to the charity leases. At the eventual point of exit you would be reliant on the difference in any premium/discount between the point of purchase and the point of sale, and on the rise or fall in the property price to determine whether any extra profit or loss is received. I'm generally removing income, and selling if large premiums are available. |
AxiaFunder | 5.12% | New in Jan 2019. Now my largest, and possibly favourite, platform. A few more cases have completed. One recently returned 107% profit before tax. My overall return is low so far due to a large premium I paid for a loan on the SM which hasn't yet completed. I particularly like the newish portfolio loans, where funds are diversified over many cases within a single investment. I'm intending to invest in a number of these to generate a regular income. No losses so far. Eventual XIRR is very difficult to estimate here as it could vary wildly between a big loss and a big profit. I'll stick my neck out and say that I'm aiming for around 20%, which would be a fair return for the risk. |
Blend | 2.64% | New in May 2021. Property development loans with a £1k minimum. Still too new for the return figure to be meaningful. Some loans have started to pay monthly, but no loans have completed yet. I like the loans here, but cash drag required to get invested and lack of an ISA means the funds will probably go elsewhere. Crazy autolend mechanics requiring idle funds on the platform needs to be addressed. |
Brickowner | 0.21% | The return so far is mainly from cashbacks as most of my investments only pay at maturity and none have matured yet. I seem to be in perpetual delays on this platform. Another year has passed, and still no completions! The loans look good, but XIRRs will be reduced by the delays. I've stopped taking on new loans here until some of my existing loans conclude. The introduction of loan reports is welcome, but the expected return figures still don't seem to be updated when they should be. |
British Pearl | -6.44% | New in May 2019. They've took a rash decision during Covid to sell all properties at a loss to a platform backer, leaving me with an unnecessary loss!!! I'm now fully out and won't be back. |
CapitalRise | 7.33% | New in Feb 2019. Another favourite. XIRR is understated as loans pay interest at maturity, would be 8.9% including accrued interest. The rates dropped too low for me for most of the year, but they are rising again now, so I'm back. |
CapitalStackers | 0% | New in April 2022. Higher risk/return development loans, though several different risk levels are available on most loans. I'm keen to see how this platform goes, especially now that they've reduced the minimum amount from £5k to £2.5k and introduced an ISA. They have a great deal of info and analysis on the loans that really appeals to me. They also publish regular monitoring updates in full. |
Connective Lending | 13.35% | Now closed. New in Feb 2021. It was a welcome addition to the pawn loan market. The website was fairly poor, and didn't work well on my android tablet, but the returns were excellent. I sorely miss this platform. |
CP Capital | 0% | New in May 2022. CrowdProperty's sister platform for 2nd charge mezzanine loans where CP own the first charge. £1k minimum. Too few loans to keep funds deployed, but can easily share funds with CP. |
CrowdProperty | 4.99% | New in Jan 2019. Another one of my favourites. Seems to have exceptionally good DD. Many loans pay interest at maturity, so XIRR is understated. On the negative side, there are a few issues on the lending side that they could and should have addressed by now (another year passes without them being addressed!). |
Crowdstacker | 3.83% | Reduced XIRR due to exposure to the A*th*nt*c Al*h**s* loan default. This platform has pivoted to being a property development loan platform. They now have a regular supply of mezzanine loans. Time will tell whether they can pull it off. Cash drag is a major annoyance, as is the time it takes them to return cash, and the fact that their ISA isn't flexible. |
Elfin Market | 8.39% | New in Feb 2020. Small toe in water here, but I'm slowly increasing due to decent returns so far. I'm cautious with investing on unsecured consumer loan platforms as I haven't had one that was really worth the risk yet. Perhaps this one could be the one. I'd like more transparency as a lender. I'd also invest more if they accepted ISA transfers. |
Funding Circle | 3.16% | Now in wind-down. The incompetence of this platform is well documented elsewhere. Only a tenner left in a couple of live loans here for me. |
Growth Street | 6.98% | Fully exited and closed. A shame. I quite liked this platform. |
Grupeer | 3.19% | I'm trying to exit my euro platforms. This platform has completely stalled since May 2020. No payments or account updates of any kind since then. |
HNW Lending | 7.22% | New in Dec 2020. Asset based loans with a minimum of £10k (£5k in ISA or autolend). Very outdated website. My loans are running smoothly once they start. I've suffered quite a bit of cash-drag on my early loans due to them not starting when forecast, and some being cancelled. I'm back lending here again as the rates have risen and there are many new loans that have already started, so less cash drag now. |
Kuflink | 13.82% | My XIRR is massively boosted here by early bonuses. My underlying return is 6.69%. I would have invested more in Kuflink if they had kept their original 20% first loss skin. I steer well clear of most 2nd tier and higher loans as the rates are usually too low on these for the risk. I've been withdrawing from Standard loans, but adding more funds to the ISA now that self-select is allowed from ISA transfers in. |
Landlord Invest | 11.46% | New in Feb 2019. Running smoothly, but not enough loans. SM is very liquid. I like this platform. I've been adding to my ISA, but can't keep the funds deployed, so I'm having to use the ISA flexibility, which is a bit of a faf. |
Lending Works | 4.64% | Now in wind-down. I greatly reduced my exposure to this platform in Dec 2019 as I was annoyed/concerned that they took too long to react to the rapidly shrinking PF issue. I stupidly left some funds in my IFISA, which are now trapped, but are very slowly repaying. |
LoanPad | 5.88% | New in Sep 2019. Another favourite. Safest platform in P2P. An absolute stalwart. Rolling withdrawals work well for quicker access in Premium account. My return is high due to referral interest rate boosts, but now falling as these come to an end. Interest rates are slowly rising. I think too many people dismiss this platform when they unfairly compare it with longer term fixed-rate FSCS protected accounts. |
Lendy | 2.64% | I only have a small investment trapped in administration here thanks to the warnings on the forums. I expect to make a large percentage loss, but a very small loss in absolute cash terms. No payments were received this year. |
Mintos € | 14.90% | Good return. I'm out as they don't accept new investments from UK investors. |
Mintos £ | 11.76% | Good return. I'm completely out since Sep 2020. |
MoneyThing | 6.45% | This platform is now in administration. I'm expecting losses. Capital is slowly being returned, but outstanding capital is still 3 times my all time platform profit. |
OnStep | 3.07% | Now in wind-down. New in Feb 2020. An Unbolted cousin. I liked the concept, but they only ever sourced 1 loan. Most profit expected at end of loan through property equity, so initial XIRR will be low. |
Property Partner | 14.45% | I'm passively withdrawing from this platform as the fees are too high for small investors. I got outrageously lucky with one of the few loans I picked that has performed very well. |
Proplend | 10.12% | Another favourite. I'm trying to shift from Standard to ISA. Struggling to keep funds fully deployed as I don't invest in the safer, but lower rate, Tranche A loans. |
Qardus | 19.07% | New in Oct 2020. Sharia compliant platform. Returns have been very good so far, but I've been hit with a first bad loan. Fortunately I was well diversified on this platform, so a complete loss of the remaining capital in the bad loan won't reduce my XIRR below 15%. It remains to be seen whether this was a one-off! I've benefited from promotional programs (QBoost and QFirst). |
Rate Setter | 4.46% | Never been keen on this platform, which has now closed. Was always too much hassle for too little return. Out now. Glad to escape without a capital haircut. |
Robocash | 12.44% | I'm withdrawing from my euro platforms. Can't complain about the returns. Fully out now. |
Shojin | 4.44% | New in Oct 2021. Higher risk/return development loans with a £5k minimum. I like this platform, lots of detailed info on the investments, and they come across as very knowledgeable. Returns are very understated as no loans have completed yet. I would like more dynamic info on my active loans. I'm told this is coming. |
SoMo | 11.41% | New in Dec 2020. Bridging loans with a £5k minimum. My loans have done well. I withdrew because the rates fell too low for me, but they are up again now, so I would gladly lend here again if a suitable loan comes up when I have spare funds. |
Unbolted | 9.13% | Another favourite. A consistent performer with stable returns. I like it for diversification into pawn loans. Difficult to get funds deployed, but a bit easier than it was. I've managed to add funds and get them deployed during the year. Return includes accrued interest as it's too tricky to remove. |
Uown | 7.80% | Potential for higher returns at end of investments. I like Uown, but I seem to be in the minority. Only 1 loan left now, so will probably withdraw when it completes. |
Welendus/Fund Ourselves | 4.83% | I lost all faith in this platform. I'm finally out without a loss, but took over a year to withdraw, which ruined the return. |
Zopa | 3.13% | Now closed. Felt like the risk v reward balance was too heavily weighted on the risk side. I was withdrawing before they closed, so glad to be out. A waste of time for me. |
My strategy for the last year was (with how it went in blue):
Move as much as possible from non-ISAs to ISAs. (Some, but quite a few of my preferred loans didn't have ISA options.)
Put this year's remaining ISA allowance in a cash ISA then split it into multiple IFISAs in the new tax year. (Yes)
Keep a single platform limit of 20% of p2p portfolio. (Yes. AxiaFunder is currently highest at 13.3% of portfolio.)
Liquidate underperforming platforms and non ISA wrapped investments as and when cash is required. (Yes, but on going: added ABL, AC, AE, LW, MT and PP as platforms to withdraw from.)
Maintain a number of rolling withdraw requests in Loanpad to fund any extra unexpected cashflow needs. (Yes)
Take advantage of cashback offers, but don't be blinded by them. (Yes)
Try not to be tempted by new platforms (I have too many already, but a few are in wind-down). (Failed, I have 2 new platforms. However I have fully exited 10 platforms and reduced 8 more to less than 0.1% of portfolio each. 19 platforms have > 1% of portfolio each.)
Reinvest maturing loans if cash is not needed. (Yes)
Keep reading P2PIF and exit platforms earlier rather than later if it looks like they're in trouble. (Ongoing)
Raise my average overall XIRR from this years 7.47%. (No. Now 7.42% due to ABLrate wind-down)
Arrange for at least 4 loans totalling at least £5k of maturing funds per calendar month for at least 12 months ahead. (Almost. It worked well for last year. 4 months are currently a little short for next year, but hopefully the months with extra loans maturing will fill in any gaps. I also have 31 loans across 9 platforms totalling £44k that are running late which should fill in some gaps. LP can also be used to plug gaps and various platforms have SMs that could also come to the rescue. I also have lots of amortising loans from the likes of Qardus which helps if cash is needed)
My strategy for 2023:
Keep going with last year's strategy.
Lower platform limit to 15% of portfolio (but allow AF to go up to 20% when using portfolio loans as they are internally diversified)
Raise my average overall XIRR from this year's 7.42%.
Invest in more AxiaFunder portfolio loans to generate a regular high-rate income.
Good luck in 2023 everyone. Please feel free to ask questions or add your own reports to this thread. I very much enjoy reading about how P2P is working for others.