Bondora removes Primary market

In recent months it has become clear that the Portfolio Manager offers greater efficiency through automation compared to manually investing. The increasing benefits of Portfolio Manager are the result of recent updates to the funding process, which optimize speed. Moving forward we will continue to focus efforts on further improving Portfolio Manager, Bondora API, Secondary Market and the reporting features available on the platform.


Why is Bondora removing the Primary Market from the user interface?
Bondora is removing the Primary Market from the UI because the speed of our popular automated option meets the investing and borrowing needs before manual investing can take effect. Our process improvements have created an environment where almost all loans are funded before they become visible in the UI. As a result, the Primary Market is most of the time empty.

Shares between different tools

This scarcity is due to the fact that when a loan enters the market it is open to bids for 10 minutes. After the 10 minutes expire the loan is closed. Our internal analysis and reporting shows that almost 100% of loans are funded within this brief window of time. Therefore, there is little reason to hold loans open any longer, as doing so would create unnecessary delays.

For the future

Bondora PM offers an array of settings. These choices enable the investor to employ a strategy that is every bit as unique as that of a manual or even API user. Diversified risk is easier than ever with the “minimum investment per loan” option. This feature allows the user to invest smaller sums across a greater number of loans thereby defraying risk.

The cumulative effect of the PM interface is a smart approach to risk with swift execution. This benefit is evidenced by the fact that each investor’s bid will be applied only to loans with an equal, or lower risk profile than the composition of their whole portfolio. This consistency keeps the users capital in the market where it can grow without unnecessary risk. Additionally, the speed of the interface has increased with the advent of a faster PM. Recent changes have enabled the PM to start running as soon as the loans reach the market. This speed is in contrast to the older model that ran periodically on an hourly basis.

Share of manual investments has decreased down to 11%. As already mentioned, manual investments have been decreasing for a while now and the reason being that manual investing is much more limited in terms of speed of investing and data analysis comapred to the Portfolio Manager and Bondora API.

Investments through API represented just over 6% of total investment amount on the platform over the month. The share of API investments has been either steady or very slowly increasing. This is explained by the fact that Bondora API has mainly been an choice for those investors more comfortable with programming skills and the nuances of the lending market.

Borsa del credito - Overview

Borsa del Credito is an Italian lending platform which focuses on medium term (36 to 60 months) financing for micro-businesses and SMEs.

Until now I have no overdue on my loans but the cash flow is pretty low and doesn’t look “automated”: once the payment date is reached the loan remains on a working period which lasts until a week. I began my investments on this platform the 15/06/2016 but until now the annualized return is 1,23%.

Returns & Commissions

The returns don’t look very interesting. The platform assures a skimpy gross return of 5% per year.

Sadly the platform has a 1% commission cost per year, but with the promotion “Profilo gestito” this commission is cancelled. The conditions for this promotions are:

• Minimum deposit of 5.000€
• You can’t manage your loans or select the borrowers.

Secondary market

There is a second market available but this has very high costs. For every transaction there is a commission fee of 15,00€ and a 1% commission on the sales.

I can’t talk much more about this second market because I still didn’t test it: a very low return is always better than a negative return.

Communication

There in not any type of communication active. Not a newsletter, a summary (neither monthly) or a report. Until now I did not receive any kind of communication about upgrades or changes.

Conclusions

This has been one of the first platform I tested and if I wouldn’t have found other great platforms such as Mintos or Twino probably I wouldn’t write this blog.

The returns are low, very low. The second market is a scum: exists but would be better to stop it. The platform doesn’t look engineered. The withdrawals are not allowed for amount lower than 100,00€.

I would have already closed this platform but I don’t want to sell with these costs, so I’ll wait and update hoping for further improvements.

Last edit: 5 september 2016

Mintos - Overview

Mintos is one of the most popular and successful p2p lending platforms to date.

The loans are proposed by the financial that are affiliated with MinTos. These credits can never be sold entirely, thus ensuring that the proposers always maintain a certain risk in the deal.
Originators are: Crediststar, AgroCredit (Latvia), Lendo.ge, kredito garantas, ACEMA, Banknote, Finance Aforti, Capitalia, Creamfinance, Debifo, HAND UNIJA, Hipocredit and Mogo.
So Mintos stands as manifold between financial offering loans and the public.

Differentiation is also geographical: their loans are from 6 European countries such as Czech Republic, Estonia, Georgia, Latvia, Lithuania and Poland.
The loans offered in August exceeded 60 million, and investors are from all over Europe (except Belarus).

Buy-back guarantee

Buy-back guarantee is a guarantee issued by the loan originator to the investor for a particular loan, whereas the loan originator will repurchase the loan from the investor if that particular loan becomes delayed more than 60 days. The buy-back guarantee is given at an individual loan level and is marked by . Once the loan with buy-back guarantee is delayed more than 60 days, the loan is automatically bought back from the investor at the nominal value of outstanding principal plus accrued interest income.

Risks

As with any investments, there are some risks. The biggest risk is associated with possible credit losses from investments. The following measures have been taken by Mintos and loan originators to mitigate the risk:

1) all loans are issued according to the established policies of the loan originators, which take into account the borrower's ability to repay the loan,

2) for certain types of loans (e.g. mortgage loans or vehicle loans) collateral has been obtained from the client, which would be used to recover the loan in the case of default and therefore lower credit losses if any,

3) for certain loans (e.g. business loans) other credit enhancements are obtained, such as a personal guarantee

4) for certain loans the loan originator has provided a buy-back guarantee, which means that if the loan is delayed for 60 days, the loan originator repurchases the investment for the nominal value of the principal and the accrued interest till the date of repurchase.

The following measures can be taken by Investors to mitigate the risk - make fractional investments in several loans across different borrowers and loan types or loan originators, which diversifies the possible credit risk.

True risks

We have seen the risks associated with credit, but with good guarantees and automatic repurchase this risk can be significantly curbed.
Instead remain out two risks, which are perhaps the ones that really should scare:
1- The risk of failure of Mintos
2- The risk of failure of the financial

1- In the unlikely event of Mintos folding investors will be given full information from the portal database on the transactions they have concluded within the framework of the portal. Mintos liquidator or administrator will take all necessary actions to transfer the servicing of all loans and investments to an appropriate manager. In order to ensure the implementation of the aforementioned provision Mintos and the law firm FORT have entered into a contract of bailment under which each month Mintos hands over, and the law firm FORT accepts for storage, data medium containing all current data from the portal.

2- In the unlikely event that a loan originator goes out of business, we have put in place arrangements so that you would continue to receive payments on the loans you have invested in through our platform. When you invest in a loan, you are buying claim rights against the borrower based on assignment agreement. Borrowers make payments on their loans to the respective loan originator, and in turn, the loan originator and Mintos distributes payments to investors. The assignment agreements would remain in place and be unaffected in the unlikely event that a loan originator were to fail or become insolvent.

As per the assignment agreement and cooperation agreement with Mintos, in case of the insolvency of the loan originator, Mintos as a proxy of the assignee would take over the management of the claim from the loan originator and recall authorisation of the assignee to the loan originator. After Mintos had taken over the management of the claim from the loan originator, Mintos would be entitled to transfer the management of the claim to any third party at Mintos discretion. It means that Mintos as a proxy of the assignee would inform the borrower on the assignment and demand to continue to make payments to Mintos or any third party at Mintos discretion.

Secondary market

The secondary market is very easy to use and fluid: you are able to sell many loans at the same price or with a premium margin.

Conclusioni

Mintos is one of the safest and most reliable platforms encountered until now, able to differentiate much risk without representing a major commitment to the investor. As long as the banking system holds the risks in using this platform will remain contained.

Last edit: 9/9/2016

Twino - Overview

Twino is a platform that provides investment loans from the platform and always through the same platform receives payments from borrowers directly. When a payment is received it is divided proportionally based on the amount invested between all the investors who invested in that particular loan.

As soon as the borrower, pays the debt off, it will start to receive payments of both capital and interest, for the entire investment period. The funds are automatically transferred to the account of Twino. You can reinvest the money received for other loans or request a refund on your personal bank account.

There is a redemption date for any loan, then the investor will receive the money in his Twino account according to the regularity of payments made by each particular borrower.

Buy-back

Twino provides a BuyBack Guarantee on most of the loans that are listed on the platform: under the BuyBack Guarantee investor protection scheme, TWINO will compensate the investors both the invested principal amount and interest, as well as pay the accrued interest in case a borrower is late with the repayment for over 30 days.

Loans with the BuyBack Guarantee are denoted with the shield icon. Loans with the Ratings A B C are not covered by the BuyBack Guarantee.

In the event that the borrower is late with his payment for a loan without the buyback guarantee (rating A, B and C), Twino actively try to recover principal borrowed and the interest earned by the borrower with internal resources, as well as external partners.

Twino applies the same collection and recovery processes in both loans that are listed with the guarantee the purchase and credits that are listed without the buy-back guarantee.

Communication

Every day, a few seconds before Mintos, sends a summary email with a summary account of the events in the last 24 hours.

They also offer a monthly newsletter with Twino numbers and with the news arrived last month.

Secondary market

The secondary market seems fluid, and offers the opportunity to buy and sell credits both with discounts and premium.

Twino charge a small fee for each transaction.

Conclusions

The results look good for the moment, the platform seems solid and the fact that propose credits offered directly from Twino mitigates the risk associated with the possible default of the companies offering credit through the p2p platforms.

Twino debuted in 2009 in Latvia, Czech Republic and Poland in 2011, Russia in 2013, Georgia in 2014, and Mexico and Denmark in 2015. So the aspirations of Twino not seem to be European but world only with digits, in relation to originate loans that continue to grow up with values triple-digit year-on-year.

To date they have issued 250 million, revenue from interest and fees for 40 EBITDA by 25% and 336 employees.

It seems a platform that grows at an impressive speed, solid, healthy and promising. We will continue to trust him.

Last update 15/10/2016

Ayondo - Overview

Launched in 2009, Ayondo is a social trading network and platform that was developed by traders for traders. They currently have over 40,000 members who use Ayondo to follow what they call “Top Traders”. Traders can trade in a wide range of Forex currency pairs, commodities (Oil, gold, silver, …), indices (US 30, US 500, US Tech 100, UK 100, DE 30, …), interest rates/bonds (Euribor Fut, Long Gilt Fut, …) and individual company shares (Chevron, Microsoft, Starbucks, …). Members can use the Ayondo rankings to find the traders they like to follow based on past performance and risk indicators.

Joining Ayondo is free, and as a member you can view the performance and trades from over 500 traders on their network in real-time. You can create a portfolio of up to 5 traders and simulate the performance based on historic trade data. If you’re happy with your portfolio you can decide to execute it on your demo account (click here to try the Ayondo demo) or live account. Ayondo live accounts are opened with their fully integrated partner broker Gekko. Unlike most other social trading networks, Ayondo doesn’t just let you follow and copy other traders, but they also allow you to copy other followers.

Anyone can join the Ayondo to try to become “Top Trader” and make some extra money from their trading skills. Ayondo ranks traders over 5 different career stages based on their risk/return profiles. Remunerations are based on the career level, from 1 to 5USD per lot executed in follower accounts. The first career stage (street trader) can be reached after 30 days and a minimum of 15 trades during which period Ayondo evaluates the trader’s risk management (drawdown must be < 25%) and performance (P/L must be at least 1%). Better risk management and performance will get the trader to the next Ayondo career levels (highest level being ‘Institutional’). Traders can send trade signals manually from an Ayondo markets real money account or from a demo account.

There’re no fees to pay for joining Ayondo or for following and copying their “top traders”. The only cost to you is the spread you pay to your broker (e.g. 2 pip per trade on EUR/USD) and any broker roll costs (if trades are left over overnight). Ayondo receive part of the broker spread which they use to pay the “top traders” and to run their business.

Currently you can open Ayondo accounts in Euros, GBP and USD and in theory you can start copying other traders with as little as 100 Euro. However, if you like to follow more than 1 trader this is fairly unrealistic and a minimum account balance of 500 to 1000 Euros is slightly more realistic.

Having started in Germany, the Ayondo social trading network is currently expanding rapidly throughout Europe. They also become the first social trading network to offer social trading to UK spread betting customers.

Estate Guru - Overview

Estate guru is an Estonian p2p lending platform with a different approach and with interesting returns.

They don’t offer business or consumer loans, they publish real estate opportunities on their site with an attached huge description of the project. The possible revenues are interesting and the paltform looks fine.

The main page shows all the investments opportunities available and for each one the interest rate, the loan period, the LTV and the time left until it expires.

The opportunities page

Buy back

All the project come with a collateral good which provide a decent LTV which usually never goes above the 65%. In case of failure the project is given to a law firm which will revover the debt using the collateral assets.

In the FAQ section we can find this answer:

"As soon as the borrower is late in a repaying an installment, we will make a contact in behalf of investors to find out the reasons and ask for explanation. In case of delay, the borrower shall pay fine for delay, specified in General Loan Terms clauses 9 and 10. When the borrower faces financial difficulties we will try to find best solution for both parties. If the borrower is not able to repay the loan, the borrower will be given the option to take a repayment holiday. If the borrower is still unable to repay the loan, we will cooperate with law firm Jesse&Kalaus, who will in order to recover the debt".

Communication

They don't simply communicate, they spam.

For every new project you will be notified with an email, when the project gets around the 60% you get another email, when you invest in a project you receive an email for loan agreement and general terms and conditions, another one when the project is totally invested and a third when is finally funded.

There is even a monthly newsletter about the projects news and events regarding estate guru during last month.

Secondary market 

Sadly there is not a secondary market which makes this platform not my best choice.

Platform

The design and the portfolio details is one of the most neglected and coarser I have ever seen.

My portfolio overview

The pie tort is practically unreadable when you reach 10 or more investments and the cumulative earning table is not any better neither.

My cumulative earnings 

Is pretty tough reach which loans are late or good, you have to read patiently a huge table and hoping for the best...

Details view

Conclusions

This is an interesting alternative to others platforms with more features, more options and more revenues. Estate Guru is usefull even for a differentiation of your portfolio.

The absence of a secondary market makes this platform a little scary if you need to leave soon and have your money back but until now looks solid, the revenues are in line with the expectations and there are always more new projects to be funded.

Last update 14 October 2016