2020, the year where everything changed for P2P investors
As the P2P landscape has changed a lot in 2020 and early 2021, it’s more than time for me to update my list of favorite crowdlending platforms !
Indeed, in roughly one year, many things happened :
- Covid-19 has shaken the world economy. No country was spared, and many businesses and individuals were hit very hard. This lead to a cascade of defaults at many levels, from individuals unable to reimburse their loans to poorly managed lending companies collapsing.
- Many platforms turned out to be scams. The list is impressive : Envestio, Kuetzal, Monethera, Wisefund, Grupeer, Fast Invest… It resulted in large losses for many investors, and a loss of trust towards peer-to-peer as an asset class
- At the same time, a long overdue regulatory effort finally started. It’s supposed to take effect in a few months, and many platforms already applied for a licence of some kind. CrowdEstate was already granted payment institution license, and both Mintos and Twino expect to receive a licence in August 2021.
- Loans marketplaces are quickly falling out of favor – and Mintos’ terrible track record certainly didn’t help ! -. When Moncera launched in early 2021, I saw it as a risky bet with a terrible timing. However, not only did they prosper, but many more loan originators have in turn created their own platform. If most of them complement loans marketplaces such as Mintos or Bondster, several lending companies now only list loans on their own platform.
With this update, I’m trying to account for these changes and focus on the platforms offering the best risk/reward ratio.
Here’s a quick overview of the four platforms on the list. Two were already present, while two other were added.
Afranga was created in early 2021 by Bulgarian loan originator StikCredit. It offers medium and long-term consumer loans with very high interest rates – around 16% as of August 2021 -. In addition to the great interest rates, the strong selling points of this platform are its great ergonomics and neat appearance.
EstateGuru remains an excellent way to diversify a loans portfolio by investing in asset-backed loans. The quality of their loans portfolio doesn’t seem to have suffered from the huge growth of their user base. Moreover, in spite of sporadic cash drags, the loans supply remains large enough to absorb the increased demand.
With roughly seven billion euros of funded volume and half a million registered users, Mintos has become huge. Unfortunately, their strategy of onboarding more and more lending companies – included very dubious ones – has backfired, and many loan originators on this marketplace defaulted. Still, it offers the opportunity to invest in several reliable loan originators and obtain great returns.
Robocash‘s success is well deserved ! Their parent company Robocash Group managed to grow in spite of the Covid epidemics, while simultaneously increasing their profit and improving the quality of their loans portfolio. If only they could improve investors’ experience by completing the redesign of their website…
Although my Crowdestor portfolio still has a decent performance, it’s kind of misleading as the platform didn’t default projects, although the borrowed has stopped repaying for many months. In addition, although the platform has seen many improvements in terms of ergonomics and reporting, the recovery process still seems non-existent. For many investors, the trust is broken; they’re fed up with words and wand to see acts and proofs.
Iuvo seemed like a great choice when Covid-19 hit, thanks to their selection of reliable loan originators. However, as more and more lending companies launched their own platforms, the need for loan marketplaces has decreased. In Iuvo’s case, the low returns offered by most originators on the platform doesn’t justify investing there anymore, apart from investors with a very large portfolio which requires come additional diversification.
Afranga is a new platform; it indeed launched in early 2021. I thus normally wouldn’t include it so early in my selection of favorite platforms.
However, it was started by reliable loan originator StikCredit, with a trivial setup : Afranga is integrated in the lending company, in a way similar to Robocash‘s integration to Robocash Group. This gives the platform a lot of credit in terms of reliability.
Moreover, the interest rates on the platform are extremely high for secured loans. They currently stand around 16%, which is even higher than at Lendermarket ! Afranga’s risk/reward profile consequently seems to be excellent.
In addition, the platform’s ergonomics is faultless. Although the website’s design seems to be heavily inspired by Mintos, the screens are much more readable and pleasant to navigate. Configuring the auto-invest will be a breeze even for beginner investors.
Although their returns are usually lower than for consumer loans, real-estate offer an interesting diversification opportunity for investors. For consumer loans, the effectiveness of the buyback guarantee greatly depends on the loan originator’s reliability. When it comes to real-estate loans, having a properly valued collateral will ensure that the eventual recovery process will recover most – if not all – invested funds.
This obviously depends on the efficiency of the recovery process – a domain where EstateGuru is rather effective -. Indeed, although recoveries take time – close to 10 months -, the resulting performance is close to 10%, which is an excellent result.
The platforms offers numerous other advantages. It allows a large degree of geographical diversification, thanks to their presence in many European countries. In addition, although cash drags happen, the loans supply is usually large enough to meet investors’ demand, even with double-digits interest rates.
In term of ergonomics, EstateGuru‘s website is very user-friendly. Even beginners will be able to invest effortlessly !
With roughly seven billion euros of funded volume and half a million registered users, Mintos is huge. This growth was mostly funded by increasing the number of loans originators on the platform, regardless of their quality. As a result, many lending companies on Mintos defaulted. Although funds were successfully recovered from several loan originators, other recoveries incurred losses for investors – only one third of the funds invested in E-Cash were recovered -. Moreover, legal proceedings for most recoveries are still ongoing, and are expected to take years !
This bad track record had very polarizing effect on Mintos investors. Those who lost money after investing in low-grade originators blame the platform for their loss, while several other investors are extremely satisfied with their portfolio’s performance.
As more and more loan originators create their own marketplace, one can wonder whether loans marketplaces are still relevant nowadays. I think Mintos still has a role to play, but rather as a complement to loan originators’ own website – whereas two years ago, Mintos was the main way to invest, and platforms such as Robocash or ViaInvest a way to diversify -.
Indeed, it’s currently possible to build a diversified portfolio with quality originators without resorting to Mintos. Afranga, Robocash, ViaInvest, Moncera, Lendermarket and Esketit all offer the opportunity to invest in reliable lending companies – often when higher interest rate than their competitors still present at Mintos, which currently offer interest rates below 10% -.
Still, we must consider a longer-term perspective. Interest rates in Mintos tend to fluctuate a lot, and they may very well increase in the coming months.
When investing on Mintos, it’s vital to focus on quality loan originator instead of quantity. Forget Mintos Strategies, forget over-diversification. Instead, focus on a small number of hand-picked originator based on their track record.
Examples of such lending companies include Eleving Group (formerly Mogo), ESTO, DelfinGroup, IuteCredit or Wowwo. My own portfolio basically consists of loans from only four loan originators !
In spite of their reliability, the average weighted interest rate of this portfolio is above 11%, which is a more than decent figure.
It still puzzles me how Robocash group can turn a profit of twenty million euros and not afford to entirely redesign their website. Indeed, although the homepage has been totally revamped, the investors’ cabinet is extremely outdated and suffers from a poor translation.
This is likely to put off prospective investors, which is a real pity as investing in Robocash is basically a must for peer-to-peer investors.
Indeed, in terms of financial performance and reliability, this platform turns out to be an excellent choice.
Let’s start by examining the financial returns. Current interest rates vary roughly between 11% and 12%. This figure is lower than at Afranga, Lendermarket or Esketit, but in line with ViaInvest and higher than for Moncera or loan originators at Mintos.
In addition, it’s crucial to take into account the reliability of Robocash Group. Indeed, this lending group currently holds the best rating on ExploreP2P’s lender ratings, with an outstanding 81 out of 100. They’ve been consistently profitable for years, and even managed to increased their profits by 50% in 2020, in spite of the Covid-19 !
It’s thus totally worth making a small initial effort to start investing on this platform.