In the fall of 2013 we started the world’s first internationally diversified P2P investment fund. The portfolio is diversified across more than 450 consumer and business loans originated by the world’s leading P2P platforms. When selecting loans for this portfolio we consider not only the absolute level of interest rate, but also fundamentals that underpin credit quality. Our goal is to select loans that offer the best return/risk ratio. Investors can select sub-compartments of the portfolio that have pre-stated terms to maturity of 3 and 5 years. Investors can also choose to have distributions of principal and interest quarterly.
Our Key Investment Criteria
- Target net returns of 6 – 10 %
- Three years and five years classes
- Internationally diversified
- Invested with P2P platforms with proven success
- Professionally managed
We present summary statistics from P2P platforms where we and our clients have invested. We’ll update these results every month, so watch this space.
Our lending fund is an internationally diversified portfolio of more than 450 loans. We’ve carefully focused our selection of platforms to include only those with a track record of more than three years and a comprehensive credit rating system.
Our Key Investment Criteria
- Number of Loans: 1 488
- Average Gross Yield to Maturity: 11.1 %
- Expected Net Yield to Maturity: 8.9 %
- Average Time to Maturity (years): 3.4
- Average Loan Age (years): 0.98
- Number of Loans Defaulted to Date: 52
- Loan Loss Impact on Portfolio: 0.19 %
- Overall Average Rating: B-
The range of investment alternatives among P2P sites is continually expanding. Our dedicated team of investment professionals constructs and manages portfolios to suit clients’ specific requirements for loan duration, loan grade, loan sector, country and currency.
Tailored Portfolios for Institutional Investors
Performance by Site
| Statistic |
Lending Club |
Prosper |
Funding Circle |
Bondora |
| Average Gross Yield to Maturity |
11.8 % |
12.1 % |
10.4 % |
26.1 % |
| Expected Net Yield to Maturity |
8.1 % |
9.0 % |
8.3 % |
15.5 % |
| Average Time to Maturity (years) |
3.9 |
3.9 |
3.0 |
2.1 |
| Average Loan Age (years) |
1.27 |
0.7 |
1.3 |
1.4 |
| Loan Loss Impact on Portfolio |
0.90 % |
1.48 % |
0.80 % |
19 % |
| Overall Average Rating |
B- |
B- |
B- |
C- |
About the Sites
Prosper (www.prosper.com) and Lending Club (www.lendingclub.com) are the largest and most reputable sites in the world today. They’ve issued more than $5 billion of loans to more than 250,000 consumers and small business in the US. These lenders provide a significant amount of data about each borrower, which allows investors such as ourselves to use analytical tools that can help us avoid loans that could generate losses.
Funding Circle (www.fundingcircle.com) is the premier site in the UK dedicated to providing loans to businesses. To date they have issued loans totaling more than £275 million across more than 4,500 borrowers. Notably, the UK government is supporting P2P sites such as Funding Circle by making lending capital available to the site. Funding Circle makes much detail available to investors about the businesses borrowing. Investors can see the names of the businesses seeking loans, their financial performance, credit history and the directors responsible for managing the business. Investors can also ask questions to the directors prior to investing. In nearly 95% of cases the directors of the business personally guarantee the loans.
Bondora (www.bondora.com) is a relatively small lender based in Estonia. Over the past year Bondora has expanded its lending activities and now issues loans in Slovakia, Spain and Finland. Bondora have clearly defined lending rules and a process of verifying data about each borrower. Bondora clients pay interest rates of between 10 % and 30 %. Such high rates of interest can compensate for the relatively high rate of losses that can be expected. Bondora seems to excel at knowing its borrowers well and finding ways to help the borrowers repay their loans. This may mean that loans are refinanced or restructured when borrowers encounter problems. We believe that so long as borrowers are willing and able to repaying, Bondora will find ways to work with the borrower. The risk for investors is that loans may be repaid over longer periods than the investors would originally anticipate. At the same time, Bondora are serious about taking legal action and turning to court appointed executors when it becomes necessary. According to Bondora investors on the platform have made returns in excess of 17 % per annum on average.
Successful investing begins with a disciplined investment process. Our process is divided into several steps:
We evaluate P2P platforms, their credit processes, operating standarts, loan terms, types of loans issued and contractual structures. We do macro-economic research and we survey the credit environment. When selecting loans for this portfolio we consider not only the absolute level of inverest rate, but also fundamentals that underpin credit quality.
We review of profiles and borrower applications provided on the platforms. We make risk/return analysis among credit quality categories. We have proprietary screening filters to avoid loans that may be more likely to default. We make relative value comparisons to choose loans we think offer the best value in terms of risk and reward.
We allocate between business loans and consumer loans. We diversify also according to country, credit quality, loan term and platform provider.We look at the impact of default rates on the portfolio. Our goal is to select loans that offer the best return/risk ratio. We on-going review loan performance and service provider activities. We work with service providers to restructure loans if necessary.
The following is a general list of questions investors considering making an investment in Symfonie Lending Fund often ask. The list does not represent the complete set of information and does not constitute an offer of investment advisory services or a solicitation of investment.
What are P2P loans?
P2P loans are loans that are intermediated between investors and borrowers. The intermediary is called a P2P lender.
Who are the borrowers?
Borrowers are either individuals or small and medium sized businesses.
Do P2P borrowers provide collateral?
In many cases, for example in the case of general purpose consumer and business loans, borrowers provide no collateral. Business owners often are required to provide a personal guarantee so that if the business fails the owner is still responsible to make loan payments. Unsecured loans typically pay relatively high rates of interest in order to attract investors. The P2P sector is growing quickly and some lenders offer borrowers the opportunity to provide collateral such as real estate, automobiles and manufacturing equipment. Collateralised loans pay lower rates of interest.
What makes P2P loans a safe investment?
Statistics from the largest and most reputable P2P lenders show the vast majority of borrowers have repaid their loans in full and on time. This is because P2P lenders, like banks and finance companies, have certain criteria borrowers must meet in order to obtain loans.
Are P2P loans guaranteed?
P2P loans are usually not guaranteed. Some P2P lenders establish reserve capital to compensate investors in case loans default. However, there is no assurance that even this additional safeguard will be enough to prevent investors from losing part or all of their capital invested.
How do P2P lenders ensure investors earn money?
P2P lenders have many procedures. First, they do background checks on the borrowers. Second, they set lending criteria. They often require that borrowers have a demonstrated history of repaying their loans. They also can require the borrowers have monthly income to make the required payments. Many lenders require verification of borrower data and proof of income. Many lenders also give each borrower a credit score that indicates how credit worthy the borrower is. Some lenders require borrowers to maintain payment protection insurance that that makes the monthly payments in case the borrower becomes unemployed, gets sick or loses his job.
What rates of interest do borrowers pay?
Borrowers usually pay rates of interest ranging from 6 % to 30 %. The interest rate depends upon several factors. Borrowers with high credit scores usually borrow at lower rates of interest than borrowers who have low credit scores.
What rates of interest do investors earn?
Investors usually earn between 4 % and 20 %.
What determines how much investors earn?
Investors who select only the highest quality, potentially safest loans usually earn lower rates of interest. Investors who select riskier loans can earn higher rates of interest. Also, investors who select loans with longer terms to maturity usually get higher rates than investors who select loans with shorter terms to maturity.
Do the borrowers and lenders know each other?
In the case of personal loans the largest and most reputable P2P lending sites ensure the identities of the investors and the borrowers are kept strictly confidential. Lenders focusing on business loans tend to encourage the borrowers to reveal their identity so that investors can know more about the businesses they are investing in.
How do investors collect the principal and interest?
P2P lenders do all the work of servicing the loan. Borrowers pay the P2P lender the same as they would pay a bank or finance company. Investors can choose either to receive payments of principal and interest or to reinvest in new loans.
