My total P2P return in 2016 (21.7%)

November 21, 2020 by Andreas

In the year 2016 I have invested in P2P loans for well over 5 years and have gained a lot of experience on many platforms. I test a lot of platforms first with small sums in order to then increase the investment amounts with good returns. For the normal investor, however, a handful of P2P platforms are usually completely sufficient.

Up until then, 2016 was the best year since I began calculating returns. Of course, I also include loan defaults, platform bankruptcies and credit initiator bankruptcies in the return calculation.

The following returns are net returns. To better compare the returns, all monthly returns are annualized, i.e. annualized:

My 2016 P2P return after failures

My 2016 P2P return after failures
Monthly returns: (pa)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct. Nov Ten
22,9% 24,2% 24,7% 22,6% 24,7% 21,7% 19,9% 19,8% 18,9% 20,2% 21,0% 20,2%

Return in 2016 (pa)
+21,7%

New annual record: 20.8% return in 2016
Although I expected an annual return below 20% at the beginning of the year, the return is again well above the 20% mark.

Better return again in the first half of the year
As in 2015, the first half of the year went better than the second half:
In the first half of 2016, the return was 23.5% pa
In the second half of 2016, the yield fell to 20.0% pa

The average interest rate is over 30%
On average, I still get over 30% interest. However, the value has decreased compared to the previous year. Of course, there are also a lot of defaults when borrowers pay such high interest rates.

Everything was better before?
If new P2P investors look at the good return opportunities in the past, they often think that they would of course have invested back then if they had already known P2P loans back then. At that time, however, the situation was very confusing. Almost all platforms posted huge losses. Many platforms were completely unregulated. At the time, nobody could have known exactly how the situation would develop over the next few years. In addition, there were hardly any reliable figures on successful debt collection on many platforms.

Early investors were well rewarded for the great risks they took.

Yield fluctuations fell significantly over the course of the year
recordIn 2016, I was able to significantly reduce and stabilize the monthly fluctuations in returns. The difference between the best and the worst month in 2016 was only 5.8%. This is a clear improvement compared to previous years:

    2013: 22.3% fluctuations in return (best month – worst month)
    2014: 16.8% fluctuations in return (best month – worst month)
    2015: 15.4% fluctuations in return (best month – worst month)
    2016: 5.8% yield fluctuations (Best Month – Worst Month)

Even in the worst month, I was still able to achieve an incredible 18.9% pa return.

Another 6 new P2P platforms will be added in 2016
recordThese include Linked Finance (Ireland), Crosslend, IUVO Group, Zlty Melon (Slovakia), Swaper, Viventor.

Lots of test platforms
On most platforms, I’m only invested on a test basis. I am invested most in Bondora and Finbee.

Loans with a buyback guarantee
Loans with a buyback guarantee are now enjoying greater popularity. However, my main share is still on platforms without a buyback guarantee (92%).

Mainly unsecured consumer loans
I mainly invest in unsecured consumer loans. So credits for private consumption. Borrowers use it to reschedule several loans, buy furniture from the loan amount or use it for a move.

My P2P investment return compared to the MSCI World:
While the MSCI World Index (including distributions) gained 11% in 2016, I was able to build a clear lead with a return of 21.7%.

return-comparison-2016-p2p-return-to-msci-world

Source: My P2P investment return compared to the MSCI World Index (including reinvestment of distributions) Source: Justetf.com

The status at the end of 2016 looks like this:

    My P2P return: From 100 points to 223 points now
    MSCI World: From 100 points to 197 points

My portfolio at the end of 2016:

The average interest rate fell from 31.4% at the beginning of the year to 30.3% at the end of the year.


Number of active P2P platforms:
16


Average interest rate:
30,3%

The Platform diversification has changed again for the better. At the end of 2016 I was already invested on 16 different P2P platforms (active platforms from € 1 outstanding investment). However, the distribution is not even and therefore not optimal. I have overweighted a few platforms.

Furthermore, I am invested in well over 1000 different loans. The Credit diversification is still in the perfect range. This achieves optimal credit diversification.

Can be liquidated immediately I have 94% of the capital. Of course, I would also have to accept discounts if I were to sell these 94% of the P2P investments.

Further data:


Loans without collateral
99%


Loans with collateral: (e.g. property, car)
1%


Privatkredite:
100%


Business Loans:
0%


Without buyback guarantee:
92%


With buyback guarantee:
8%

My portfolio on December 31, 2016:

Loans with more than 60 days in arrears:

10,5%

Share of loans already written off as a loss

78,6%

For a portfolio of € 10,000 it would look like this:

€ 10,000 invested.
1050 € more than 60 days in arrears.
€ 825.3 already written off as a loss and taken into account in the return calculation.

Since I am still transferring new capital to the P2P platforms, the percentage of loans with a delay of more than 60 days is still quite small. It would look different if I had invested once at the beginning and then stopped everything.

At the end of the year, 10.5% of all loans were in arrears by more than 60 days. Almost 80% of these failures have already been included as losses in the return calculation. Around 1/3 of the interest for secondary market losses and monthly depreciation still goes away from the return.
If the failures doubled due to an economic crisis, the return would still be around 11% per year.

Falling interest rates can be observed
Interest rates can be seen falling over time on all platforms. At Finbee, for example, there was initially up to 40% interest. Now only a maximum of about 32% for new loans. Fortunately, I have invested in many of the high-interest loans, so the interest rate does not fall as quickly as the new loans. Most loans run for up to 5 years over the long term.

In December comes the review of 2017 and my total return after all failures.

    Review of 2011
    Review of 2012
    Review of 2013
    Review of 2014
    Review of 2015
    Review of 2016
    December 2020: Review of 2017
    January 2021: Review of 2018
    February 2021: Review of 2019
    March 2021: Review of 2020

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