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Crowd2Fund Releases Loan Data and Actual Fund Performance

After five years, we are now able to publish our comprehensive loan book data set and calculate actual returns after fees and bad debt. Have a read below as we dive into the loan book and break down our findings.

17th September 2018

Crowd2Fund has been trading for over four years and have built up a significant track record of data, which we are now publishing for the first time as open source. This reveals detailed information on the loans issued via the platform and actual investor earnings, including the key figure of actual fund performance at 8.51% after fees and losses, tax-free.

We are confident that the aggregate returns from their cumulative data proves the ability for alternative finance to become even more mainstream. We are now modelling a number of scenarios for returns to help better inform investors.

The analysis shows that In the worst case scenario, where all defaulting loans are not recovered, investors will still generate an actual APR of 6.47% after fees, tax-free. However, it is expected that some of the defaulting loans will be recovered, so in this case, investors can expect to earn an 8.51% APR after fees, tax-free.

This is significant as it is higher than the levels offered by other peer-to-peer platforms, as well as current and savings accounts. While this proves a positive track record for Crowd2Fund and demonstrates the quality of businesses listed on the platform, it is important to remember past performance and forecasts are not reliable indicators of future results.

Crowd2Fund is increasing its transparency and believes that this will be a key factor in generating higher returns for investors. Every deal listed can be reviewed by the public in detail, with enough information for individuals to make a balanced investment decision. This means that bad deals can also be flagged by the crowd, which is a step forward in the P2P lending industry. 

Download a copy of the loanbook here.

Actual Earnings and Loan Book

When P2P lending was in its infancy, it was difficult to measure returns as there was limited historical information, especially regarding defaults. However, many of the original loans issued on Crowd2Fund have now undergone a full repayment cycle, and therefore this rich data set is able to provide greater accuracy on actual returns, as opposed to predicted or target earnings.

Crowd2Fund is one of the few platforms to publish loan book data in full, on both a monthly and all-time basis. Alongside the actual APR offered to businesses, the page carries information on late re-payments, as well as defaulted and written-off loans.

With investors now being able to analyse this data themselves, it provides them with an even clearer expectation of the returns that they could earn.

To date, the fund has delivered more than £1.25 million in interest to investors, from 285 loans. The fund has been growing at 300% year-on-year for the past three years and aims to lend £40m over the next 12 months.

How Defaults are Calculated   

Crowd2Fund have different categories that relate to distressed loans. These are classified as follows:

  • Arrears: Loans which have missed repayments between 1-90 days.
  • Default: Loans have gone to court. Typically, but not always, after 90 days.
  • Restructured: Closely working with business to re-define the loan terms.
  • Written-off: Loans which have become unrecoverable and all paths exhausted.
  • In administration: Normal business activities have ceased and negotiation to recover the loan is underway.

Recovering missed loan repayments is a time-consuming process, and Crowd2Fund diligently follow up on any loan that has gone off schedule. To date, only 0.3% of all loans have been written off. On these rare occurrences, investors are immediately informed and are updated with any progress in relation the recovery of the respective loan.

Modelling Scenarios

This announcement is a crucial milestone because Crowd2Fund has until now only been able to advertise an ‘estimated’ APR of 8.70% before fees and bad debt. They have conducted in-depth analysis on the overall fund performance and uncovered the following insights:

  • The best case offers an APR of 8.51% after fees and bad debt, tax-free;
  • In the worst case, which assumes all defaults are written off, the APR is 6.47% after fees and bad debt, tax-free.

The key conclusion is that analysis of individual investor portfolio performance shows there are very few investors who are currently losing money. In the best case, only 0.44% of active investors are expected to make a loss; and worst case, with defaulting payments written off, it is only 1.83%.

The purpose of these models is to allow investors to make better-informed choices. Such transparency enables Crowd2Fund to open up to the crowd, marking a positive milestone for the development of P2P lending.

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Risk warning

Past performance and forecasts are not reliable indicators of future results. Your capital invested is not covered for compensation in the event of a loss by the FSCS. Tax treatment will depend on the individual circumstances and may be subject to change. Please see our Risk section before making an investment decision.