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Teaching the World About Peer to Peer Lending

My Quarterly Marketplace Lending Results – Q2 2017

My latest quarterly investment results show an overall 7.28% return for the year ending June 30, 2017

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Every quarter around this time I get emails from readers asking when I will be publishing my quarterly returns post. For many years now it has been one of the most popular features on Lend Academy. People like to know how others are doing so I have been sharing my returns here every quarter since Q4 2011. Over the years I have diversified beyond my initial investments in Lending Club and Prosper into the three major asset classes within marketplace lending: consumer, small business and real estate.

Overall Marketplace Lending Return at 7.28%

One could almost say my returns are in a downward spiral. Since peaking in Q1 2014 at 12.44% my returns have decreased pretty much every quarter and for the last two years that decrease has averaged around 0.5% per quarter. Two years ago I stood at 11.3% and my weakest Lending Club account earned a respectable 8.19% and the average return of my original six accounts was 9.51%. Times have indeed changed since then.

This past quarter my overall returns stood at 7.28% and the returns for my original six accounts were 5.07%. My worst Lending Club account was my original account there and it came in at 1.95% for the year. The only good news, if there was any, was that I did not have a negative quarter in any of my accounts this quarter unlike in Q1.

For those readers who may be new to my quarterly returns post the reason for the drop in my returns are issues, primarily at Lending Club, in the D and E grade loans issued in late 2015 and early 2016. These have underperformed significantly, particular the 36-month loans, and these are the loans I have made the bulk of my portfolio. Now, I made some adjustments at the start of this year but these loans are still defaulting at higher than expected rate and it will be the end of the year I expect before I will see things begin to improve.

Now on to the numbers. Click the table below to see it at full size.

As you look at the above table you should take note of the following points:

  1. All the account totals and interest numbers are taken from my monthly statements that I download each month.
  2. The Net Interest column is the total interest earned plus late fees and recoveries less charge-offs.
  3. The Average Rate column shows the weighted average interest rate taken directly from Lending Club or Prosper.
  4. The XIRR ROI column shows my real world return for the trailing 12 months (TTM). I believe the XIRR method is the best way for individual investors to determine their actual return.
  5. The six older accounts have been separated out to provide a level of continuity with my earlier updates.
  6. I do not take into account the impact of taxes.

Now, I will break down each of my investments from the above table grouped by company. [Read more…]

My Quarterly Marketplace Lending Results – Q1 2017

My latest quarterly investment results show an overall 7.73% return for the year ending March 31, 2017

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It is that time again when I share my investment returns. I like sharing these details because I believe in transparency and I know people are interested in my returns and how they are trending over time. I started out in marketplace lending many years ago with just Lending Club and Prosper but slowly have added new investments over the years. I included a relatively new account this quarter, StreetShares, they are a small business lender with a difference – you can read about them here and also listen to my podcast with the co-founders from last year.

Overall Marketplace Lending Return at 7.73%

The downward trend continues unabated in my returns. And while I said last quarter that was my worst ever, unfortunately I can now say the same again. In fact, this quarter set new lows, with one of my Lending Club accounts actually losing money during the quarter. This is the first time that has happened with any of my marketplace lending accounts.

I complained last quarter that the annualized return, based just on the latest quarterly numbers, on my main Lending Club account had dropped to 2.1% in Q4. Well, this quarter it dipped further. The balance on this account on December 31, 2016 was $39,733, the balance on March 31, 2017 was $39,472 for a -2.6% annualized return according to Lending Club’s own statements. I have had negative months here and there but never before have I experienced a negative quarter at Lending Club or Prosper since I started investing almost eight years ago.

When I look at where the recent defaults have been coming from the majority are in the D and E grade 36-month loans issued in 2015. These loan grades have underperformed significantly, something we covered in some depth earlier this year. When I said last quarter that I hoped the worst is behind us that clearly was not the case. I now expect my returns to continue to drift downward as more of this 2015 vintage hits their peak default months.

Now on to the numbers. Click the table below to see it at full size.

As you look at the above table you should take note of the following points: [Read more…]

My Quarterly Marketplace Lending Results – Q4 2016

My latest quarterly investment results show an overall 8.07% return for the 2016 calendar year.

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Regular readers know that this is one the most popular features on Lend Academy. I have been sharing my detailed quarterly returns with readers since 2011 and I will continue to do so for the foreseeable future. I know investors are most interested in returns, in particular how they have been trending over time. You can go back and look at the breakdown of my investments every quarter for the past five years.

Overall P2P Lending Return at 8.07%

The good news, if there was any this past quarter, is that my declining returns have stabilized somewhat. My overall trailing twelve month (TTM) return in Q4 2016 was 8.07% compared to 8.21% in Q3 2016. I am taking this as good news because in every quarter for the previous one and a half years my returns had dropped 0.5% or more. Comparing the year ago quarter the picture is still not pretty – my TTM return in Q4 2015 was 9.85% so I am down almost 2% since then.

I have been thinking for some time that my returns have just about reached bottom but now I am not so sure. The reality is that Q4 was the worst quarter I have ever had if you look at it in isolation. Just taking a look at my six mature Lending Club and Prosper accounts the TTM return for those accounts was 6.75%, but the annualized return just for Q4 was just 5.3%. And if you look at my main Lending Club account that was opened in 2009 the numbers were even worse – the annualized Q4 return on that account was just 2.1%.

Overall my defaults in Q4 were the highest they have ever been. Several of my Lending Club accounts had negative months where the charge-offs were more than the total interest earned. December seemed to be a little better and January was also decent so I am hoping the worst is behind us. We are all paying for the mistakes made by Lending Club and Prosper in 2015 as they clearly mispriced many of their loans, particularly those in the higher risk loan grades where my portfolio is focused. They have since increased interest rates and tightened underwriting considerably so we should see better results from 2016 and 2017 vintages. But the reality is I still have many loans in my portfolio from 2015 that are late and will eventually default.

If you are interested in more analysis of the Lending Club and Prosper loans issued in 2015 you should read this excellent analysis done by Ryan recently.

Now on to the details. Click the table below to see it at full size.

[Read more…]

My Quarterly P2P Lending Results – Q2 2016

The latest update of my quarterly investment results shows a return of 8.72% over the past 12 months.

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Sharing the details of my returns is one of the regular features on Lend Academy and one that I am quite passionate about. It is also the feature that I get the most emails about – people really like to see actual returns on seasoned investments. I have been investing since 2009 and opening up my accounts for the world to see since Q4 2011.

You can go back and follow my journey from an investment that has grown from $84,000 in Q4 2010 to around $681,000 today. Now, I have added substantially to my initial investments and will continue to do so for the foreseeable future. Eventually, I plan to have a diversified seven-figure portfolio made up of consumer, small business and real estate loans.

Overall P2P Lending Return at 8.72%

Now on to the numbers. Once again my trailing twelve month (TTM) returns have dropped from the previous quarter. While still a respectable 8.72% it is down from 11.30% just a year ago and also down from 9.28% last quarter. This is a trend that has continued for a couple of years now but I expect I am close to the bottom (assuming the economy still keeps chugging along). While declining interest rates and increasing defaults have been the norm for some time now there are signs this trend is coming to an end. The average interest rate on most of my accounts has risen in the past quarter as the platforms have raised rates quite aggressively this year. My six core holdings, those that have been opened the longest, also continued their decline to come in at a TTM return of 8.01%.

Now on to the details. Click the table below to see it at full size.

P2P Lending Returns Q2 2016

As you look at the above table you should take note of the following points: [Read more…]

My Quarterly P2P Lending Results – Q1 2016

My latest quarterly investment results show an overall 9.28% return for the year ending March 31, 2016.

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We have had quite a month of news here in the P2P lending industry. But now I want to return to a regular feature on the blog, something that I have been doing since 2011: sharing my quarterly returns.

I like sharing the details of my investment returns because I believe in transparency and I know returns are what motivates many, if not most, investors. I started out with just Lending Club and Prosper but slowly have added new investments over the years all focused on the lending space. I included a relatively new account this quarter, P2Binvestor, they are an asset-backed small business lending platform open to accredited investors – you can read my original review here.

I have a total of 11 accounts now, most are with Lending Club or Prosper and I will be adding new accounts to this list over the coming year as I am adding new money into a couple of different real estate platforms. I have a relatively large exposure to unsecured consumer credit, small business loans through Direct Lending Investments and now I want to diversify a little more into real estate. More on this later in the year. Now, let’s get right to the numbers.

Overall P2P Lending Return Now at 9.28%

[Read more…]

Different Ways to Calculate P2P Lending Returns

In this post, we share different ways that returns can be calculated for investors in the major P2P lending platforms, Lending Club and Prosper.

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Calculate P2P Lending Returns

There is no industry standard when it comes to calculating returns on Lending Club and Prosper but this is something that is very important from an investors perspective. This is an updated post that we first covered in 2011 on different ways of calculating returns on Prosper and Lending Club. While both companies continue to provide returns in your account, there are some updates to what is provided by them and many people prefer other methods.

Here are six different ways for investors to get a handle on their returns.

1. Rely on Lending Club and Prosper

Both Lending Club and Prosper will give you their estimate of the return on your p2p lending portfolio. At Lending Club you are given the option to see your Net Annualized Return or your Adjusted Net Annualized Return. Lending Club breaks down returns into three categories: Primary Notes, Traded Notes and Combined return as shown below.

Adjusted_Net_Annualized_Return_Lending_Club

You can read more about the calculation Lending Club uses, but the major difference between net annualized return and adjusted net annualized return is that adjusted net annualized return takes into consideration loss assumptions based on loans that are in grace period, late or in default. This is their estimate of the return on the outstanding principal in your portfolio. Because they are only calculating returns based on outstanding principal, your returns may be overstated if you have idle cash in your account.

Prosper has a similar way of calculating returns, but instead of adjusted annualized returns they use a seasoned only number. Here is what they say about returns:

To calculate Annualized Returns, a total gain or loss is calculated by summing all loan payments received net of principal repayment, credit losses, and servicing costs. The gain or loss is then divided by the average daily amount of principal outstanding to get a simple rate of return. To annualize that rate, we divide it by the dollar-weighted average Note age of your portfolio (calculated in days) and then multiply it by 365.

Prosper breaks out returns on notes that have seasoned, meaning this number only uses those notes that are 10 months or older. These numbers are shown both on the overview and investing page.

Prosper_Annualized_Return
[Read more…]

My Quarterly P2P Lending Results – Q4 2015

My latest quarterly P2P investment results show an overall 9.85% return for the 2015 calendar year.

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For four years now I have been sharing the quarterly returns of my P2P lending investments here. I get emails from so many people who like this feature of the blog so I know it is one of the most popular parts of Lend Academy. Needless to say I am committed to continuing this practice.

There has been some talk in recent months both in the media and on the forum about an increase in defaults. Ryan covered this topic well earlier this week so I won’t dwell on it here. Suffice it to say that there is some evidence that defaults have increased slightly in the second half of last year and those increases are more pronounced in the higher risk loans. This also happens to be where my portfolio is concentrated and as you will see my returns have been impacted.

So, let’s get right to the numbers.

Overall P2P Lending Return Now at 9.85%

For the first time since 2012 (when my account had a more conservative mix) my overall returns have dropped below 10%. My trailing twelve month return ending December 31, 2015 stood at 9,85% a decline of almost 1% from three months ago. The returns for my core six holdings, each one has been open for several years, has dropped to 8.96%.

Throughout 2015 both Lending Club and Prosper reduced their interest rates, with that trend only reversing in the past couple of months. I am very curious to see if this increase will have a material impact on returns going forward or if it will be offset by a future rise in defaults. Suffice it to say the days of easy 10-12% returns that many of us have enjoyed will become more difficult.

Now on to my numbers. Click the table below to see it at full size.

P2P Numbers Q4 2015

[Read more…]

My Quarterly P2P Lending Results – Q3 2015

Here are my latest quarterly P2P investment results showing an overall 10.69% return over the last 12 months.

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When I meet people at conferences one of things I hear most often is how much everyone likes the fact that I share my returns on Lend Academy. They like to see the real world returns of an investor that has been doing this for a while. Which is why every quarter I bring you my quarterly returns post. I have been sharing the details of my Lending Club and Prosper returns for many years and I am committed to keep doing it.

I now have ten different accounts, which I admit is a lot, but with taxable, Traditional IRA and Roth IRA in both my name and my wife’s name, spread across two platforms, I have found this number to be necessary. I will go through each one of these ten accounts below and provide you with a screenshot as well as a little explanation of each one. But first, let’s get right to the numbers.

Overall P2P Lending Return Now at 10.69%

This past quarter saw a decline in my overall return from 11.30% to 10.69%. The main reason for the decline is the continued lower interest rates for my core six holdings (each one has been open for several years) at Lending Club and Prosper. The return there is down to 9.16% versus 9.51% in the second quarter. While I continue to suffer from a large number of defaults the situation is exacerbated by the decline in interest rates. My weighted average interest rate of each investment, for the most part, has been going down as higher interest loans mature and the money is reinvested into lower interest loans (with the same credit criteria).

Now on to my numbers. Click the table below to see it at full size.

P2P Numbers Q3 2015

As you look at the above table you should take note of the following points: [Read more…]

My Quarterly P2P Lending Results – Q2 2015

The latest edition of my quarterly P2P investment results shows a solid 11.30% return over the past 12 months.

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I love this industry. I love the fact that it is an efficient way to connect borrowers and investors, I love that borrowers can have a quick and seamless loan application process, I love that the industry is starting to achieve scale so that it can really make a difference. But most of all, I love the returns that marketplace lending can provide for investors.

So, every quarter I open the kimono, so to speak, and share the details of my returns. I have been investing since 2009 and I have several accounts now at both Lending Club and Prosper as well as a couple of funds. I go into some detail of every single account and also provide screenshots of each one.

Overall P2P Lending Return at 11.30%

While interest rates offered to borrowers continue to decline across the board, the returns on my six main accounts, those accounts where I have been invested for several years, seemed to have stabilized. My trailing twelve-month (TTM) return for these six core Lending Club and Prosper accounts actually went up over Q1 from 9.29% to 9.51%. Overall, for all ten accounts my return came in at 11.30% this past quarter pretty much the same as it was in Q1 when it came in at 11.34%.

[Read more…]

My Quarterly P2P Lending Results – Q4 2014

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One of the most popular features for readers is my quarterly returns post. I have been sharing the details of my Lending Club and Prosper returns since the 4th quarter of 2011 and I will continue doing so.

While the principle of transparency seems to be less important at the major platforms these days here at Lend Academy we are still very much committed to it. So, every quarter I will share the details of all my P2P lending investments and show you how I am doing.

This past quarter brought several changes to my portfolio. I added two new investment accounts that now brings my total to ten separate investments. I admit this is a little excessive but if you read the details below you will understand why I have added two new accounts. Before we do that, though, let’s get right to the numbers.

Overall P2P Lending Return Now at 11.11%

My overall returns, while still solidly in double digits, continue to slowly decline. The returns for my core six holdings, each one has been open for several years, has dropped below 10% for the first time since I started investing more aggressively. There are two reasons for this: more defaults and lower average interest rates. Both Lending Club and Prosper continue to reduce their interest rates in order to attract more borrowers, so it is becoming more difficult to achieve those 10-12% returns that many of us have become accustomed to for the last several years.

Now on to my numbers. Click the table below to see it at full size.

P2P-Lending-Results-Q4-2014

As you look at the above table you should take note of the following points: [Read more…]

About Lend Academy

Lend Academy has been bringing you all the news and information about peer to peer lending since 2010. Founded by Peter Renton, Lend Academy not only has the most active news site, but also the largest online forum and the first and most popular podcast in the industry.

The Lend Academy team loves peer to peer lending and our staff have all invested their own personal money in one or more of the platforms. Lend Academy Media is part of Cardinal Rose Group which also owns LendIt, the leading industry conference, and has a majority interest in NSR Invest.

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