April 2020 portfolio updates
April used to be one of my favourite months. Not warm, not cold, everything around turned green, and I could start making short hiking trips in the nearby mountains and get a dose of fresh air. This year’s April I had to stay indoors, work from home and order everything online. The only trips I made were around the block so that I don’t forget what walking is. According to our government, we need to do this for 2 more weeks, after which I’m allowed to walk outside without signing a piece of paper saying I’m going to the store around the corner to buy milk.
How’s my portfolio doing:
- P2p lending portfolio really struggling
- Real estate equity crowdfunding portfolio dropping in value
- Corporate bonds dropped around 20% and still waiting for a recover
- Stocks portfolio almost fully recovered to the January values, but most likely waiting for another big drop
- Startup investing portfolio not showing signs of stress, but I’m expecting them to show very soon
P2P lending portfolio
As the current crisis deepens, I can see a few trends:
- Business lenders are really struggling, as most of the businesses are affected by the current lockdowns; there’s a big increase in refinancing loans
- Property development loans also took a big hit, as development is restricted in many countries affected by the pandemic
- Consumer lenders are also taking a hit, especially the ones with high APRs, with governments restricting their activities
- Invoice financing shows no signs of stress up until now
I’m not going to increase my portfolio in the following months. The stock market is too attractive and with higher potential gains than the p2p lending space.
This means that while I deposited 400 EUR in April (to EstateGuru, Neo Finance, Flender and Investly), I’ve withdrawn 1100 EUR (from Fast Invest, TFG Crowd, Wisefund and Bondster).
Earnings were also low, 167 EUR, compared with the 245 EUR last month, and the 300 EUR I was expected at the beginning of this year. The reduced earnings were something expected though, one of the perks this crisis is bringing is delayed payments on everything. Another one is a higher risk of default for many of the p2p lending platforms.
The platforms that contributed most to my reduced earnings were Bondster, Crowdestor, Wisefund, Grupeer and Monethera. They didn’t pay any interest in April. Grupeer and Monethera were already old news, as they suspended their activity the previous month. Crowdestor also decided the previous month it would delay most payments until June. Wisefund decided to allow borrowers delayed payments and loan extensions, after consulting investors with a survey. Bondster just said they’re suffering from a liquidity slowdown, so payments will be delayed as well.
I run a small survey in my previous update, regarding p2p investment plans in the near future. Only 15% of the respondents said they’ll keep investing as they did before. More than 30% said they’ll just withdraw everything from p2p lending.
Almost all platforms in my portfolio have no new funds invested or very low amounts compared with the previous period. P2p investors are reluctant to inject money in them, as long as the economic situation is unclear. It’s hard to invest funds in platforms with no clear plans, not enough transparency and with trust that erodes with each new crisis.
The big question now is not if the returns will be above 10%, as many platforms claim, but if they’ll be able to survive and if investors funds are safe with them.
The only platforms in my portfolio that seem to not be affected by this crisis are Neo Finance, Debitum Network and Investly. All 3 of them offer lower returns and have fewer fans in the crowdlending community. This, in turn, means less panic. In the case of Investly, investments volumes actually increased during this crisis.
My real estate crowdfunding portfolio
If my p2p lending portfolio is doing bad, investing in real estate equity is even worse.
Since the beginning of the year, I’ve added around 650 EUR to my portfolio, investing in a few projects from Inveslar, Brickstarter and Yielders. My current portfolio amounts now to around 4700 EUR.
My total earnings reached in April a total of -200 EUR. The drop in earnings is caused by the latest adjustments in property values on British Pearl, which caused my portfolio to drop around 25% (300 GBP).
I’m still receiving rental income from Yielders and Reinvest24. Property Partner suspended their rental payments since March. Brickstarter rents apartments in the Airbnb industry, a zero-return industry in this period. And the full effect of this crisis in the real estate industry is yet to show up in the following months.
Corporate bonds portfolio
My WiseAlpha investments suffered a 20% drop last month, mostly due to my EUR portfolio, which is riskier than my GBP one. It’s only temporary, so nothing to worry about. I’ll keep adding funds as usual and wait for the bond prices to stabilize. I consider this a good opportunity to buy cheap bonds.
Stock market portfolio
This is where almost all my free funds went in the past 2 months. Meaning paying for the 6000 EUR margin I had on Degiro. At the end of April, my March losses were almost erased. Still around 15% down, but anyway, this will not be the only drop in the near future. I think the current market sentiment is way too optimistic for the recession we’re in, and when investors will finally wake up all April’s market gain will be erased.
In the same survey from last month, 75% of the ones that responded said they’re investing their available funds in the stock market. The same thing I did, and, I assume given the recent highs, most of the investors. Irrational exuberance comes to mind.
Since I didn’t have funds to invest for a while, I played around building a stock screener in Google Sheets. It’s a bit basic, with price trends and financials, and a list of companies I’m interested in. I’m not investing in most of them, but some are interesting to watch, like Boeing, which should have bottomed since last year, but investors hype still keeps its price up.
This is the worst period to invest in startups. They have slim chances of success during normal economic times, and even less during this crisis.
However, I still made a few purchases on Seedrs, amounting to around 500 EUR last month:
- Bought a few more shares of Assetz Capital and Investly on the secondary market
- Invested in EstateGuru’s crowdfunding campaign that just kicked off a few days ago
I also plan to add to Seedrs some small amount in the following 2 crowdfunding campaigns:
- Lendahand, a socially responsible p2p lending platform I’m also invested in
- Strows, a UK investment manager I have around 1k invested in
The amount of noise generated by all the platforms I’m invested in reached new records in April. All of them are struggling to explain they’re still stable, they have a good plan for this crisis, they have new cashback offers and so on.
Out of 70 loan originators, 7 have defaulted and 10 are rated C, meaning soon-to-be-defaulted. At least Mintos is keeping track of them here, otherwise, it would be hard for investors to keep up with all the daily rating changes in the past month.
This, in turn, affects investors trust in the platform and its ability to protect their funds. Following up on a recent survey, Mintos says most investors are still optimistic and willing to invest in their platform.
However, the actual amount invested in April was just 40 million EUR, compared with around 300 million EUR seen in the months before the pandemic. And I assume most of the 40 million EUR is just reinvested funds, not new ones added to the platform.
On a good note, the number of loans on the secondary market loans dropped to 1 million (from 2 million last month). It could be just because they introduced a 0.85% fee on selling loans on the secondary market, but maybe some of the invested funds would go now to new loans, instead of recycling old ones.
I kept buying until mid-April loans on the secondary market, as they had good discounts and were rated A. At some point, the A-rated loans on the primary market reached 16% interest, and then I switched to buying them.
My crisis strategy:
- Buy only loans rated at least A-
- Auto-invest turned off, so I have better control on what I buy
EstateGuru’s biggest announcement this month is they’re raising funds on Seedrs. They’ll use the new funds mostly for geographical expansion and making them ready for institutional investments. I like the company, and I’ve invested a small part of my funds in their crowdfunding campaign.
From their blog, I love EstateGuru’s employee investment journey series, with articles on what their employees invest into. The last one is here.
My portfolio is still in good shape, with all loans in current state and no defaults. Good news for now.
EstateGuru is also facing a slowing down in growth, with only 3.5 million EUR loans funded in April, compared to 8 million in March. It could be worse, so good job, EstateGuru.
Grupeer froze all activities on their platform last month. Since then, they’re issuing statements every 2 weeks saying they’re coming with a plan to stabilize.
The last one is here, although it doesn’t say much, except they’re still working on getting payments from their borrowers and that they’ll start talking more with investors.
Meanwhile, the situation on the investors’ side seems like a bad joke. Secret groups, secret strategies, telegram groups where unwanted opinions are eliminated with ease, and websites asking for money upfront on a collective lawsuit against Grupeer, like this one here.
It seems the new trend in making money from p2p lending is to co-op investors into collective legal actions they don’t understand, and collect fees they’ll gladly pay, fueled by fear.
Neo Finance seems to be just a bit affected by the current crisis, with loans funded dropping in April to 1 million EUR, from 1.5 million EUR in the previous months. They’ve also released their audited financial report for 2019 here and their Q1 2020 sales report. They’re growing steadily, and even if my returns are lower than on other platforms, I prefer low returns to no returns.
The biggest development on Fast Invest in April was that they finally added a secondary market, allowing investors to sell their loans with whatever discount they want. The secondary market is a bit hybrid, with the sold loans mixed between the primary market ones, marked with a special flag, but it’s a good thing to have. You can read more about it here.
I’ve also noticed this month Fast Invest finally deleted all their junk articles from their blog and decided to publish articles related to Fast Invest and their operations. I’m starting to like their blog.
I’m sure Fast Invest also struggles with liquidity issues these months, as the withdrawals are getting slower, taking 3-4 weeks now.
Meanwhile, they’re doing all they can to keep investors on their platform. Interest rates increased to 18% on some of the loans. The in-progress withdrawals have a cancel button now. On the withdrawals page you get messages telling you how much more value these funds would generate if you kept investing them. I like their marketing strategy. It’s simple, well-thought and well-targeted. Not sure if it works or not, as they don’t provide statistics, but I love their strategy.
April’s been a bad month for Viventor in terms of investments. Almost no funds were invested in the platform. Their cumulative investments increased by only 250k EUR, compared to 4.5 million EUR in the previous months.
I’ve stopped my auto-invest profile for a while, and I’ll think a bit more if I want to keep my funds here or just move to different pastures. The funds in transit flag they recently added is just annoying for me. As an investor, paid means the funds are in my account. Where the funds are in between, at the loan originator, in some bank waiting for approval, in Viventor’s account, it’s all the same for me. They’re just funds that are not in my account, so unpaid.
The same ugly stunt is played by Mintos too, and it’s becoming a trend in the p2p lending space.
Wisefund ran a survey last month asking investors if they’re willing to accept postponed interest payments from borrowers, due to the Covid-19 crisis. It was a bit late notice, as anyway, no interest payments entered in any accounts, as no borrowers were able to pay their loans.
Wisefund also suffers from no new investments on the platform. As soon as the crisis started, almost no new funds were invested on the platform. The last funded project was a 7k EUR loan to an Estonian wine company, and the only currently available is another 20k EUR loan for the same company.
TFG Crowd opened business accounts, although I’m not sure if it helps, as they also suffer from low investment volumes.
I’m not planning to invest new funds here in the near future, but I might come back later this year. I’ve made a withdrawal last month and it still took only hours to get the money in my account.
I’ve added 100 EUR to my Flender account in April, even if my portfolio started to get payment delays. Flender is the only crowdlending platform I’m invested outside of the Baltics, and I put more trust in it than in most Baltics platforms.
It’s not the best time to be a Crowdestate investor right now. And it’s not easy to be Crowdestate right now. They’re investment volumes dropped to only 200k EUR in April, the lowest since a very long time.
My Crowdestate portfolio is in dire straits, with 3 projects defaulted (or close to default) and 7 out of 10 projects with late payments at the end of the month.
The real estate market doesn’t go through good times right now, with most construction activities delayed. Crowdestate published an interesting report on how the current crisis affected the real estate markets in the countries they’ve issued loans.
Crowdestor delayed all payments until June (at least for the loans I have in my portfolio), and for the past 2 months, I haven’t earned anything from my Crowdestor investments.
They also seem to suffer from an acute lack of new funds, as the size of the new loans available for funding are in the region of 10,000 EUR, compared to the 300-500k EUR in the previous months.
Investly seems to thrive in this crisis. Their invoice volumes increased in the past months. April invoices funded amounted to almost 1.5 million EUR, 20% higher than January and February amounts. The interest rates also increased, as the demand is higher.
They also published their Q1 results here.
They’re still small, oferring low interest rates compared to competitors in the Baltics. This also means their investors are a lot less scared by the current conditions.
PeerBerry has seen its volume of investments halve in the past months. That could have been a lot worse. They’re still spending heavily in advertising, in bettering the site (see the new loan originators and statistics pages).
I’ve stopped investing in Bondster, as it didn’t bring anything new to my portfolio.
Bondster also suffers from a lack of invested funds, investments dropping from the 4 million high in December to 400k in April. They’re on top of the situation and released a statement at the beginning of last month that delays in payments and buybacks will occur due to a slowdown in their cashflow.
Impact investments fund
Abundance is struggling to get new funds to the platform. The only project in funding, a community homes project in Liverpool, managed to gather 300k GBP in the past 2 months, out of the 4 million GBP needed.
Thanks for reading my update. To sum it up, April was a bad month but not as bad as I expected it to be. Given the current stop in most European economies, it’s no wonder everybody’s struggling to survive.