This is the second post in a two part blog series that examines the “40 Act Funds”. In part 1 we examine the structure and performance of the funds in the UK and US. In part 2 below, we will delve into the implications of funds on marketplace lending. Go here to read part 1 Impact on investors, financial advisors, and lending platforms …
Part 1 of 2: The Emergence of 40 Act Funds & What It Means For Marketplace Lending
This is the first post in a two part blog series that examines the “40 Act Funds”. In part 1 of this series, we examine the structure and performance of the funds in the UK and US. In part 2, we will delve into the implications of funds on marketplace lending. Introduction The first and second mutual funds (“40 Act …
Changes in Lending Club Underwriting – Looking Beneath the Headlines
The news at Lending Club was a shock to everyone in the direct lending world. The process failings and potential business / legal ramifications have been discussed ad nauseam – and they are extremely serious. Several institutional investors have pulled back on their purchasing programs, for good reasons. Lending Club needs to show investors that the same problems will not …
Lending Club Performance – The Good And The Bad (Feb 2016)
As I previously wrote, some of the recent coverage on Lending Club’s credit performance is somewhat one-sided, and we believe Lending Club’s loan performance is broadly in line with expectation. That said, the actual performance depends on the specific segment in question, which we will explore in greater detail in this post. Similar to what some of the commentators have …
LendingClub did not “misfire” in their underwriting
Late last week, there was a Bloomberg Business article on LendingClub’s recent “misfiring” of loan origination models. While I personally enjoy most of Bloomberg’s coverage of marketplace lending (positive or negative), this article appears to have taken a recent LC-Advisor report out of context. Below are a couple actual data points on LendingClub’s underwriting performance: 1. Consistent performance on quarterly …
Measuring Who Prepays in Marketplace Lending: An Observation Based on Lending Club Loans
As an investor, it pays off to understand who prepays on personal loans. Prepayment is the early repayment of a loan by a borrower, often as the result of optional refinancing to take advantage of lower interest rates. Borrower prepayment means forgone interest income, and many peer-to-peer lending platforms don’t charge a prepayment penalty. Thus, the construction of an optimal …
Growth in Marketplace Lending Spawns Specialized Risk Services and Tools
With the growth of marketplace lending, institutional investors need to manage their risk exposure. It’s important to understand what makes this market different from other asset classes and how to employ tools and models tailored for its risks. Originally written by Katherine Heires and posted by GARP Risk Intelligence on November 19, 2015, this article highlights different specialized risk services and tools …
What’s The Madden With You?
The Madden v. Midland Funding, LLC ruling proves the importance of understanding the regulatory risk faced when pricing any asset class- especially in marketplace lending. Below is the MonJa analysis on how this ruling effects p2p institutional investors. First though, some of the facts: For a Madden v. Midland case overview, check out Lend Academy’s post “Madden 2015 Has Nothing to …
Loan Selection In P2P Lending: Does It Actually Work?
The major P2P lending platforms, such as Lending Club and Prosper, have been terrific at underwriting and setting a level playing field for marketplace lending – and several of them have recently launched or improved their passive vehicles; this is great news for investors seeking passive income with a minimal amount of hassle. A common question that I often get …
Gone in 60(/12) seconds – 3 types of loans algorithmic investors buy
A few weeks ago Simon Cunningham at Lending Memo wrote a great post on algorithmic investing in marketplace lending. There is a perception that institutional investors are buying the best loans using credit models. This is a good assumption. But it’s also worth asking: do institutional investors really behave differently from retail investors on the marketplace lending platforms?