Today is a big day for me and for Lend Academy. We are officially expanding our horizons into investment management with the launch of Lend Academy Investments. This is not a solo venture. I have partnered with two financial services veterans, Bo Brustkern and Jason Jones, in creating Lend Academy Investments, which is an SEC registered investment adviser focused on the p2p lending space.
Lend Academy Investments is all about making p2p lending easier to access for individual investors. Regular readers know the impact that institutional investors have had on this space and we want to turn the tables on that. We give individual investors a professional money management option using the same tools as the big guys. More on that later. First, I want to give you a bit of background.
How Lend Academy Investments Was Born
It was around two years ago when I first received an email from a reader asking if I would help manage their investments on Lending Club and Prosper. I thought about it at the time and decided against pursuing it. But on a semi-regular basis since then I have continued getting more requests like that one.
I began to think I really should expand into investment management but wasn’t sure I could do it by myself. That was my challenge; I didn’t have any background in finance. Then last year, through my work on the LendIt Conference, I met Jason Jones and Bo Brustkern. I enjoyed working with these gentlemen both of whom have a strong background in finance.
So when I got a call from Jason last summer about joining up with him and Bo to create a new investment management firm, I started to think about it more seriously. One of my concerns was that I wanted to maintain my independence and continue my work writing here at Lend Academy. Thankfully, they were not only supportive on this idea, they were insistent that I continue exactly as before. In fact, I believe Lend Academy will become even more valuable because both Jason and Bo will also be writing informative articles now in addition to my own.
In the end the decision was relatively easy. Investment management is a natural progression to the work I do here. And I feel this is a way I can help more people in a very tangible way. While I will continue to write about the leading industry players and share my investing knowledge, I know that many people simply do not want to do the work to invest themselves.
There are tens of millions of investors who have money in the stock market. But the vast majority of these people do not choose individual stocks and trade their own accounts. They invest in mutual funds and ETF’s and have a professional money manager make their investing decisions for them. I expect the same will happen as this industry continues to grow.
The Lend Academy Investments Service Offerings
1. Separately Managed Accounts at Prosper (in beta)
Our Separately Managed Account service is open to all eligible Prosper investors. Lend Academy Investments is hired as an investment advisor, our clients select an investment strategy and instruct us to manage their account on their behalf. We offer two flavors:
a) Conservative: We deploy a conservative loss minimization model to invest in the loans that we think have the lowest likelihood of default, which are mainly AA and A grade loans only. Our target Net Return (after fees) is 5%.
b) Balanced: We deploy a diversified filter that invests in every loan grade. Our target Net Return (after fees) is 7.5%.
Our minimum investment size is $25,000 and our annual fee is 0.95% of assets. We are currently in beta but are open for both accredited and non-accredited investors. Please bear with us during our beta launch. Our on-boarding timing and our process controls may be slower and more cumbersome than expected as we perfect our back end systems.
2. Lend Academy P2P Fund*
Our P2P Fund will be diversified across both new and established P2P platforms from around the world. We are launching with three leading US platforms: Lending Club, Prosper and Funding Circle USA. The goal of our P2P Fund is to provide access to the online lending asset class. In many ways, it is a reflection of the LendIt Conference in its diversification. We will apply sophisticated credit modeling while taking a moderately aggressive approach with our investments. Our P2P Fund offering will be for accredited investors only with a minimum investment of $250,000. Our annual management fee is 1.5% and our target Net Return (after fees) is 10%.
The online home for Lend Academy Investments is http://invest.lendacademy.com/. There is some basic information on that site now and we will be expanding it over the coming weeks and months.
My passion for this industry is only increasing. I truly believe that every eligible investor should have the opportunity to invest in p2p lending in his or her investment portfolio. And now for people who don’t want to do their own investing we are happy to provide an attractive solution.
* Lend Academy P2P Fund is offered solely to accredited investors (as defined under Regulation D of the Securities Act of 1933) who can demonstrate that he or she is qualified to invest in the Fund by a third-party verification under Rule 506(c) of Regulation D and who agree to be bound by the terms of the Fund’s offering documents.