P2P Lending (Reaching for Yields)

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P2P Lending (Reaching for Yields)

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I know reaching for yield is a bad idea for corporate bonds, even for a well diversified portfolio.

Is this also true for P2P lending to the corporate world? Which is better, skipping the highest yielding loans and focusing on the safest, or having a bit of everything?

The P2P fintech is Funding Societies in Singapore.
Right now, I'm getting 9.13%, fees are 18%. Times
are good and I'm worried about the eventual downturn.
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Re: P2P Lending (Reaching for Yields)

Post by AlohaJoe »

at wrote: Sat Aug 10, 2019 8:49 pm I know reaching for yield is a bad idea for corporate bonds, even for a well diversified portfolio.

Is this also true for P2P lending to the corporate world?
Of course reaching for yield is also true for that. Why on earth wouldn't it be?
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Re: P2P Lending (Reaching for Yields)

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Sorry, I think I should have asked is looking for quality better or total market better?
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Re: P2P Lending (Reaching for Yields)

Post by z3r0c00l »

Sounds too good to be true. I presume the 18% fee is really 1.8% fee. The problem is when the defaults start to roll in.
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Re: P2P Lending (Reaching for Yields)

Post by arcticpineapplecorp. »

in 2008 vanguard's high yield corporate bond index fund fell by 22% if memory serves. Total bond market ended up 5%. Total stock market U.S. fell 38%.

So if you are worried about a downturn, you'd want safer bonds, not risky bonds, right? Risk and return are inextricably linked. If you want higher yields, you have to accept the higher risk that goes with the territory. If you want less risk, you have to settle for lower returns. There's no free lunch. No way around the risk return relationship. Those two partners are inseparable.
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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Re: P2P Lending (Reaching for Yields)

Post by willthrill81 »

P2P returns were great in the U.S. for years until they weren't. I averaged 9.5% from 2013-2017, then my returns steadily dropped to about 4%. No way is the risk worth that return.

Corporations got into the business and swamped the market. Lenders also reduced their standards for borrowers, resulting in more defaults. This sank returns. Add in platform risk, and, IMHO, the asset class is no longer viable for retail investors at least.
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Re: P2P Lending (Reaching for Yields)

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I've got a small position in Singapore's Funding Societies since March 2019.

No. of investments - 69
No. of ongoing investments - 19
Current Principal Defaulted(S$) - 0.00!!!
Annualised portfolio performance (p.a) - 7.94% (gross)
Annualised net of fees and idle funds - 5.83%

This portfolio has been Covid-19 pandemic tested and the investments are mostly for property secured loans with company and directors' guarantees. I'm of course ecstatic as the returns are equity-like!
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Re: P2P Lending (Reaching for Yields)

Post by garlandwhizzer »

In the current worldwide interest rate/yield environment any investment that currently offers a 9+% yield has considerable risk. You don't need to read the prospectus. There are multiple risks including default risk, currency risk translating foreign returns back into dollars, geopolitical risks of less stable governments, less rule of law and financial transparency in some international jurisdictions, and outright fraud which is something to consider in 9+% yield offerings. The bond market prices risk more efficiently than the stock market. Bond market participants rarely succumb to euphoria in contrast to equity investors. This is true worldwide.

P2P is not exempt from this risk/yield rule and neither is anything else in that provides yield on a reliable basis. The endless investor search for the magic place where there is robust yield with lack of risk is usually a waste of time and often a waste of money too. There were times in the past when there were very good yields with no risk. We are not living in one of those eras now and do not expect to see one for the foreseeable future.

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Re: P2P Lending (Reaching for Yields)

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I've been adding a small position in P2P (less than 2% net worth) over the past 1 year and been researching on alternative investments such as P2P at the same time.

I gleaned the data from LendingClub (which I can't invest as I'm a foreign alien) with amazement.

LendingClub has data since 2007 (total 14 years). There're 45 data points (3 yearly from 2007 till 2009, 42 quarterly from 2010 till 2020).

All 44 data points are positive except for 2007 where it's a small loss of -0.79%. It looks impressive as these data points are Great Financial Crisis and Covid-19 tested!
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Re: P2P Lending (Reaching for Yields)

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at wrote: Thu Sep 03, 2020 10:28 pm I've been adding a small position in P2P (less than 2% net worth) over the past 1 year and been researching on alternative investments such as P2P at the same time.

I gleaned the data from LendingClub (which I can't invest as I'm a foreign alien) with amazement.

LendingClub has data since 2007 (total 14 years). There're 45 data points (3 yearly from 2007 till 2009, 42 quarterly from 2010 till 2020).

All 44 data points are positive except for 2007 where it's a small loss of -0.79%. It looks impressive as these data points are Great Financial Crisis and Covid-19 tested!
U.S. Treasuries have had positive nominal returns every single year in their history. That alone doesn't mean much.

In addition to things like interest rate risk and default risk, LendingClub has platform risk. That risk has not been manifested yet and might never do so, but it's still there.
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Re: P2P Lending (Reaching for Yields)

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willthrill81 wrote: Thu Sep 03, 2020 10:34 pm U.S. Treasuries have had positive nominal returns every single year in their history. That alone doesn't mean much.

In addition to things like interest rate risk and default risk, LendingClub has platform risk. That risk has not been manifested yet and might never do so, but it's still there.
Every security has risks including US treasuries (S&P no longer gives US triple-A rating). That I understand.

The idea in portfolio management is not to eliminate all risks (or else emerging and SCV stocks will have no place in a portfolio). It's to evaluate each security by its risks/returns/covariances profile and whether when combined together into a portfolio will it be attractive and push the portfolio towards the upper-left quadrant. P2P looks like that sort of investment worth a small position in a portfolio.
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Re: P2P Lending (Reaching for Yields)

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at wrote: Thu Sep 03, 2020 10:59 pm
willthrill81 wrote: Thu Sep 03, 2020 10:34 pm U.S. Treasuries have had positive nominal returns every single year in their history. That alone doesn't mean much.

In addition to things like interest rate risk and default risk, LendingClub has platform risk. That risk has not been manifested yet and might never do so, but it's still there.
Every security has risks including US treasuries (S&P no longer gives US triple-A rating). That I understand.

The idea in portfolio management is not to eliminate all risks (or else emerging and SCV stocks will have no place in a portfolio). It's to evaluate each security by its risks/returns/covariances profile and whether when combined together into a portfolio will it be attractive and push the portfolio towards the upper-left quadrant. P2P looks like that sort of investment worth a small position in a portfolio.
The 4% returns I was getting by the time I wound down my LendingClub notes in early 2019 weren't at all worth the associated risks, IMHO, and that was only a little over a 1% premium at the time over 10 year Treasuries.

I'm taking my future risks on the equity side.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: P2P Lending (Reaching for Yields)

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[edited]
Last edited by Valuethinker on Sat Sep 05, 2020 12:06 pm, edited 1 time in total.
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Re: P2P Lending (Reaching for Yields)

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Valuethinker wrote: Fri Sep 04, 2020 4:01 am What have you learned, then by posting here?
Is there any policy here that I can't post about P2P. It's afterall a legit investment.
Valuethinker wrote: Fri Sep 04, 2020 4:01 am You have made up your mind that this is a good investment on a risk adjusted basis. Presumably you have read the Risk Factors section of the Prospectus and are comfortable w what is there?

What could we say here that would make you change your mind?
I never say I've made up my mind. I did mention that I only allocate 2% to P2P. If I've made up my mind, I'd have dumped 20% into it.
Valuethinker wrote: Fri Sep 04, 2020 4:01 am Or did you just seek additional validation?
Yes, and I'd not have looked into it had not Larry Swedreo sold it so well in his book. I'm open to new ideas and opinions just like I'm open to Larry's. It's not that I liked every of his ideas. If there's evidence against his thesis, I'd like to listen to them on this board.
Valuethinker wrote: Fri Sep 04, 2020 4:01 am If so, let me say it: In light of what you have said here and your knowledge of the investment and its risks, about which I know nothing, this is a good investment for you. A genuine market anomaly where higher returns are not fully compensated for by higher risk.

There. That's affirmative.
Is that a sarcasm?
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Re: P2P Lending (Reaching for Yields)

Post by MBB_Boy »

willthrill81 wrote: Thu Sep 03, 2020 11:06 pm
at wrote: Thu Sep 03, 2020 10:59 pm
willthrill81 wrote: Thu Sep 03, 2020 10:34 pm U.S. Treasuries have had positive nominal returns every single year in their history. That alone doesn't mean much.

In addition to things like interest rate risk and default risk, LendingClub has platform risk. That risk has not been manifested yet and might never do so, but it's still there.
Every security has risks including US treasuries (S&P no longer gives US triple-A rating). That I understand.

The idea in portfolio management is not to eliminate all risks (or else emerging and SCV stocks will have no place in a portfolio). It's to evaluate each security by its risks/returns/covariances profile and whether when combined together into a portfolio will it be attractive and push the portfolio towards the upper-left quadrant. P2P looks like that sort of investment worth a small position in a portfolio.
The 4% returns I was getting by the time I wound down my LendingClub notes in early 2019 weren't at all worth the associated risks, IMHO, and that was only a little over a 1% premium at the time over 10 year Treasuries.

I'm taking my future risks on the equity side.
+1. I had basically the exact same experience, down to timeframe and returns! Even with the filters I built and the automated services I used to try and get an edge, all the good loans are gone before retail investors get a chance.

The only difference is that I didn't turn back to equity - I continued looking for "alternative" investments. Since winding down my P2P, I have done a few things - Real estate MLP with friends, Series B financing for a local company, found a 5 year unlimited add-on CD at a bit over 3% (closed now, but GTE financial), and most recently started earning interest on my crypto tokens (there's a long thread on this already, won't rehash here).

To OP - really feel that P2P lending is dead. I'd look elsewhere for yield if your AA calls for something besides stocks. There are still some high yield savings accounts that are worthwhile (like Varo, 2.8% with a 10K cap). There are also the multi-year guaranteed annuities (MYGAs, plenty of threads on topic)
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Re: P2P Lending (Reaching for Yields)

Post by willthrill81 »

at wrote: Fri Sep 04, 2020 5:57 am Yes, and I'd not have looked into it had not Larry Swedreo sold it so well in his book. I'm open to new ideas and opinions just like I'm open to Larry's. It's not that I liked every of his ideas. If there's evidence against his thesis, I'd like to listen to them on this board.
LENDX, the fund that Larry was recommending for P2P lending exposure, has not done well at all. The current yield is 3.94%, but the expense ratio is an eye popping 4.57% in addition to the management fee of 1.50%.
at wrote: Fri Sep 04, 2020 5:57 am
Valuethinker wrote: Fri Sep 04, 2020 4:01 am If so, let me say it: In light of what you have said here and your knowledge of the investment and its risks, about which I know nothing, this is a good investment for you. A genuine market anomaly where higher returns are not fully compensated for by higher risk.

There. That's affirmative.
Is that a sarcasm?
Yes.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: P2P Lending (Reaching for Yields)

Post by Valuethinker »

[edited]


I will say this. You are either in, or you are not. 10% at least in this type of investing or it will have de minimis effect on final portfolio value. That's broadly true of almost any asset class decision.

There could be an anomaly there. But you are going to have to grab it with both hands.
Last edited by Valuethinker on Sat Sep 05, 2020 12:07 pm, edited 1 time in total.
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Re: P2P Lending (Reaching for Yields)

Post by JackoC »

willthrill81 wrote: Fri Sep 04, 2020 9:55 am
at wrote: Fri Sep 04, 2020 5:57 am Yes, and I'd not have looked into it had not Larry Swedreo sold it so well in his book. I'm open to new ideas and opinions just like I'm open to Larry's. It's not that I liked every of his ideas. If there's evidence against his thesis, I'd like to listen to them on this board.
LENDX, the fund that Larry was recommending for P2P lending exposure, has not done well at all. The current yield is 3.94%, but the expense ratio is an eye popping 4.57% in addition to the management fee of 1.50%.
at wrote: Fri Sep 04, 2020 5:57 am
Valuethinker wrote: Fri Sep 04, 2020 4:01 am ... A genuine market anomaly where higher returns are not fully compensated for by higher risk.
To be fair the expense ratio includes interest on borrowings. In the prospectus that's estimated around 1.8% of a 5%* total (including the 1.5% management fee). Also the expenses are on net assets. In the last semi-annual report the fund had ~$4.8bil of loans and $1.4bil liabilities (mainly borrowings). Sources are various links seen on this page:
https://www.stoneridgefunds.com/

This is basically somebody running a consumer bank. As equity holder in a bank we don't expect 0.1% expenses inside the bank, just 0.1% on the fund that's holding the stock of the bank.

Also this doesn't have to be exactly an 'anomaly' of credit risk v return as say compared to public stocks or junk bonds of equivalent credit worthiness. The idea is largely to harvest illiquidity premium, not a theory of market inefficiency per se.

That said your assessment is quite plausible: expenses and fees could easily rob the idea of any real juice it has, very often the case of funds based on interesting ideas in theory. And, the market may have been spoiled for DIY'ing, if the DIY'ers get systematically less attractive loans (though this may partly get back to it being an illusion that high expenses can be avoided in sourcing a diversified portfolio of tiny high risk personal loans: credit analysis costs money). I used to think of P2P lending as something I might get around to evaluating seriously after the market blew up and lots of people lost their shirts. :happy However that's also less likely plausible if it's mainly turned into a professional market on the lending side. If somebody introduced the idea of lending to people of even good credit score at 15% or 18% it would sound great. And in the form of the strictly professional credit card business it is a potentially good business. But there are loads of real expenses to it and the only way to access it is buying stock and debt issued by big credit card lenders, which is nothing special. So perhaps same here, even though the exact form is different.

*I don't know if Bloomberg info, which implies ~6% rather than ~5% on net asset total expenses is more up to date or garbled.
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Re: P2P Lending (Reaching for Yields)

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Valuethinker wrote: Fri Sep 04, 2020 10:09 am You really didn't, it seemed, want to hear criticism of your idea? When anyone raised a concern you shot them down?
I did raise quite a bit about the risks aspect of P2P lending which is quantitative. How about you? How did you contribute to the debate? By posting an oh so positive sarcasm?
Valuethinker wrote: Fri Sep 04, 2020 10:09 am So I decided to make my point couched in a positive way.
Oh yeah, so positive indeed!
Valuethinker wrote: Fri Sep 04, 2020 10:09 am Do you know, offhand, what the additional risk is in Lending Club, to which one poster referred? I do, because I remember this discussion here a few years back.
I've already said, I'm not allowed to invest in Lending Club. The P2P lender I participate in does not have platform risks. You kept jumping in without knowing what you're talking about!
Valuethinker wrote: Fri Sep 04, 2020 10:09 am I sense though that you did not start this thread to learn and certainly not to be receptive to doubts about the idea?
I sense that you've nothing worthy to say and is only trying to pick up a fight.
Valuethinker wrote: Fri Sep 04, 2020 10:09 am I will say this. You are either in, or you are not. 10% at least in this type of investing or it will have de minimis effect on final portfolio value. That's broadly true of almost any asset class decision.
How I pick my allocation is non of your business.
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Re: P2P Lending (Reaching for Yields)

Post by XacTactX »

I think P2P lending can be a smart way to diversify a portfolio. I first learned about it by reading Larry Swedroe and Kevin Grogan's Reducing the Risk of Black Swans (2018). In the book they recommend picking relatively safe loans because when there is an economic downturn and the unemployment rate goes up, these loans will default less often. This is assuming that you want to diversify away from stocks and improve the portfolio during bad times. From what I've read, borrowers who have a mortgage or own a home outright, borrowers who do not apply for credit within 6 months, borrowers with higher incomes, and borrowers who need money for debt consolidation and credit cards will default on their loans less than the rest of the population.

If you qualify for LendingClub and Prosper there is a lot more I can provide, but I'm not familiar with P2P lending outside of the US.
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Re: P2P Lending (Reaching for Yields)

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Hi guys, are you guys instigating that LendingClub has a multi-tier system where the creams (loans with good risks/returns profiles) are given to institutional investors and crumbs are left to retail investors?

I wonder whats the business logic for doing that? After all, the costs of doing business are the same and this strategy will leave a bad taste in the public mind.
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Re: P2P Lending (Reaching for Yields)

Post by XacTactX »

For LendingClub, if an institution (or a person with millions of dollars) is buying a whole loan, it gets to see the loan 12 hours before the smaller traders do. So if an institution knows how to predict default rate on loans better than smaller investors, it will be able to buy the best loans, and less of those loans will be available for small investors.

LendingClub Fractional vs. Whole

From what I can see institutions are not choosing the best loans and leaving the worst loans for small investors. Fractional loans had a return of 5.72% with an annual loss of 5.71% and whole loans had a return of 5.50% with an annual loss of 5.47%. They are pretty similar overall.
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Re: P2P Lending (Reaching for Yields)

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at wrote: Fri Sep 04, 2020 10:02 pm Hi guys, are you guys instigating that LendingClub has a multi-tier system where the creams (loans with good risks/returns profiles) are given to institutional investors and crumbs are left to retail investors?

I wonder whats the business logic for doing that? After all, the costs of doing business are the same and this strategy will leave a bad taste in the public mind.
LC no longer really cares about retail investors. They're going after the big money coming from corporate investors.
XacTactX wrote: Fri Sep 04, 2020 10:19 pm From what I can see institutions are not choosing the best loans and leaving the worst loans for small investors. Fractional loans had a return of 5.72% with an annual loss of 5.71% and whole loans had a return of 5.50% with an annual loss of 5.47%. They are pretty similar overall.
Frankly, I don't think that corporate investors care to try to pick only the best notes. Their concern is more getting their cash working for them at rates higher than what they can get elsewhere.

Back when I first got started with LC, I first went to Nickel Steamroller, which was free at the time, and reviewed their data from LC going back to their beginnings. I found criteria for finding notes that historically had around 9-10% returns, but this was only about 3% of all LC notes (and I experienced those returns for the first several years, then the returns on even those notes declined substantially). Corporate investors aren't interested in such small potatoes.

It's a little similar to the problem that Warren Buffett has lamented about with Berkshire Hathaway. If Buffett only had $200 million to invest, he could find some great opportunities, but it's a lot harder when he's got tens of billions in cash to invest.
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Re: P2P Lending (Reaching for Yields)

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Hi XacTactX and all,

I see that LendingClub has eliminated loans with poor credit ratings since Q3 2019. Do you think that's a good move and will contribute to the overall risks/returns profiles for the average investors given that loans with poor credit ratings are the patsy investments that have poor risks/returns profiles?
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Re: P2P Lending (Reaching for Yields)

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at wrote: Fri Sep 04, 2020 8:13 pm
Valuethinker wrote: Fri Sep 04, 2020 10:09 am I will say this. You are either in, or you are not. 10% at least in this type of investing or it will have de minimis effect on final portfolio value. That's broadly true of almost any asset class decision.
How I pick my allocation is non of your business.
That's the best way to get feedback.
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Re: P2P Lending (Reaching for Yields)

Post by XacTactX »

Yes, I think it was a good idea for LC to get rid of D and E rated loans. The risk is not worth the reward. My D rated loans gave me a 3.49% return but A rated loans are giving 3.74%, so the risk did not pay off.
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Re: P2P Lending (Reaching for Yields)

Post by YRT70 »

at wrote: Fri Sep 04, 2020 8:13 pm
I've already said, I'm not allowed to invest in Lending Club. The P2P lender I participate in does not have platform risks.
Which one?

I've got 2% of my portfolio invested in Mintos.com. My average return is 11%.
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Re: P2P Lending (Reaching for Yields)

Post by Valuethinker »

at wrote: Fri Sep 04, 2020 8:13 pm
I will say this. You are either in, or you are not. 10% at least in this type of investing or it will have de minimis effect on final portfolio value. That's broadly true of almost any asset class decision.
How I pick my allocation is non of your business.
I have clearly offended you, for which my apologies.

I have edited out my previous contributions (but they are still quoted in your replies). I will just leave my (factual) point, that with most asset classes, you have to make a big investment to affect your final returns meaningfully. That's the problem with anomaly investing - you have to make a big bet to change the outcome, and that bet could be wrong.

[edited out discursion re irony v sarcasm, British v American sense of humour]

On allocation. I set the criteria in what I said. To have a meaningful impact on your terminal wealth.

So my statement is about the mathematics of investing in anomalies. It has to be a big anomaly (or you put a lot in it) to move the needle. Hence my rule of thumb of 10%.

The actual percentage clearly depends both on expected returns, expected volatility & expected correlation. All of which may not be related to historic values for these parameters.
Last edited by Valuethinker on Sat Sep 05, 2020 12:11 pm, edited 1 time in total.
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Re: P2P Lending (Reaching for Yields)

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YRT70 wrote: Sat Sep 05, 2020 12:38 am I've got 2% of my portfolio invested in Mintos.com. My average return is 11%.
You're a clear winner. Congrats!
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Re: P2P Lending (Reaching for Yields)

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XacTactX wrote: Fri Sep 04, 2020 11:44 pm Yes, I think it was a good idea for LC to get rid of D and E rated loans. The risk is not worth the reward. My D rated loans gave me a 3.49% return but A rated loans are giving 3.74%, so the risk did not pay off.
Actually, my highest return notes (9-10%) with Lending Club were D and E rated notes, but certainly not all of them. I had specific criteria, and probably fewer than 10% of the D and E notes satisfied them.
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Re: P2P Lending (Reaching for Yields)

Post by XacTactX »

I think that is the mistake a made. When I opened my LC account I didn’t know as much as I do now and I didn’t know how to separate high quality D rated loans from the low quality ones. There are some diamonds in the rough in the low credit grades.
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Re: P2P Lending (Reaching for Yields)

Post by willthrill81 »

XacTactX wrote: Sat Sep 05, 2020 9:56 am I think that is the mistake a made. When I opened my LC account I didn’t know as much as I do now and I didn’t know how to separate high quality D rated loans from the low quality ones. There are some diamonds in the rough in the low credit grades.
Indeed. My lowest returns were actually with C rated notes. And I don't think that all of the risks involved were ever adequately compensated with A rated notes; the interest rates were just too low, especially after removing LC's fee.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: P2P Lending (Reaching for Yields)

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https://investor.vanguard.com/etf/profile/BND

I note with tribulation that TBM has a yield of ~1.2% with double the term duration of LC loans. So, I can say that LC's rates are "competitive", higher returns with higher risks.

https://investor.vanguard.com/mutual-fu ... view/vwehx

Junk bonds have a yield of ~3.9% with a similar term duration of LC loans. So, LC loans are the equivalence of junk bonds?!
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Re: P2P Lending (Reaching for Yields)

Post by willthrill81 »

at wrote: Sat Sep 05, 2020 8:25 pmJunk bonds have a yield of ~3.9% with a similar term duration of LC loans. So, LC loans are the equivalence of junk bonds?!
If you believe in efficient markets, it would seem so. But junk bonds have the edge there due to their comparatively high liquidity. I can tell you from experience that LC notes are not very liquid.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: P2P Lending (Reaching for Yields)

Post by YRT70 »

at wrote: Sat Sep 05, 2020 8:25 pm Junk bonds have a yield of ~3.9% with a similar term duration of LC loans. So, LC loans are the equivalence of junk bonds?!
Yes this is true for the loans I invest in on Mintos too. I could get similar returns by directly investing in bonds from the loan originators that offer the loans on Mintos. They all have junk rating.

Why aren't you answering my earlier question? Or did you miss it? I asked where you invest in P2P.
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Re: P2P Lending (Reaching for Yields)

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YRT70 wrote: Sun Sep 06, 2020 1:56 am Why aren't you answering my earlier question? Or did you miss it? I asked where you invest in P2P.
I'm from Singapore. There're a number of P2P lenders in Singapore. The largest (which I invested in) is a company called Funding Societies. The loans are mainly disbursed to mciro-companies worthed a few millions to tens of millions. One of the safest type of loans (which I'm concentrating in) which has high yield is property-backed loans. Loan-to-property-valuation is typically 0.5 to 0.66. In order to default, the company has to bankrupt, typically 2 company directors who act as guarantors will also have to bankrupt and the property loans have to go underwater. Yields of these type of loans are typically 6% to 8%.
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