I know I am very late with my update this quarter as many of you have pointed out in emails and comments. But rest assured I am still committed to sharing my results publicly and I apologize for the tardiness of this update.
I wish I had good news to share but alas the decline in my marketplace lending returns has continued unabated. The biggest culprit for my declining returns is my exposure to unsecured consumer credit. As I have written about many times in the past a decline in underwriting standards at the major consumer lending platforms in 2015 and 2016 led to a marked increase in defaults where returns for individual investors like myself were significantly below projections. Recent vintages indicate that this severe decline is being reversed but given the loans I am invested in are three and five years in duration the effects are still being felt inside my own portfolio and will be for some time.
Overall Marketplace Lending Return at 4.46%
In my report from one year ago my trailing twelve month (TTM) return stood at 7.28% and I wondered whether my returns were in a downward spiral. That has proven to be the case as I am down almost three full percentage points over the last year as my TTM returns as of June 30 stood at 4.46%.
About 18 months ago I moved to a more conservative approach in my investing, focusing primarily on the lower risk loans at Lending Club and Prosper. The average interest rate of my portfolios continues to drop steadily every quarter but given my sizable portfolios of thousands of loans it takes a while for these changes to fully take effect. Interestingly, the one account where I have taken a more conservative approach from day one, my Prosper New Roth IRA, is easily my best performing consumer lending account with a TTM return of 6.32%.
Now on to the numbers. Click the table below to see it at full size.