Assetz Capital is a mid-large sized peer-to-peer lending platform, having lent out over £214 million since its launch in March 2013. It specialises in property and small business lending. It offers a wide variety of ‘auto-pilot’ products and also manual selection of investments.
Note: Article first written August 2016, fully updated February 21st 2017
Expected Returns: 3.75% quick access, 7% automated product, up to 18% gross on manual investments.
Provision Fund: Yes, apart from manual investing.
Sell Out: Yes.
Minimum Investment: £1
Cashback: Currently none, but often new customer offers run from time to time.
Speed of Investment: Depends on product: 3.75% very fast, 7% slow.
Innovative Finance ISA: In progress.
Assetz Capital Review:
Assetz Capital offers 5 different investment products. The 4 automated products have a “Discretionary Provision Fund targeting 3x coverage of expected losses based on 2016 Bank of England Stress Tests.” (read more).
1. Quick Access Account* (QAA)
- Easy access product with 3.75% returns.
- Loans are against secured assets and backed by a provision fund.
- Maximum £100,000 investment per person.
- Instant withdrawals: often shows an average waiting time of 0 seconds.
- Many investors use this as a parking place for funds waiting to be invested in a higher return product. In most other P2P platforms your money is sitting idle on 0% returns while waiting in a queue, but with Assetz Capital at least it’s earning you a reasonable return.
2. Great British Business Account* (GBBA)
- Loans to small and medium enterprises (SMEs).
- Returns of 7% backed by provision fund.
- Can be quite slow to get invested, but on the upside funds will be earning 3.75% while you wait.
- No fee for early withdrawal, subject to demand from other investors.
3. Green Energy Income Account* (GEIA)
- Similar to the GBBA above but focuses on green investments like renewable energy projects.
- Also has 7% returns, a provision fund and no withdrawal fee.
4. 30-Day Access Account* (30-DAA)
- 4.25% returns backed by provision fund.
- Investors are unable to withdraw money before 30 days.
5. Manual Loans Investment Account* (MLIA)
- Manually select loans offering between 6.5% and 18% gross return.
- No provision fund, targeted at ‘more sophisticated’ investors.
- Loans secured against assets.
- Some loans may also be invested automatically via the GBBA or GEIA.
- You select a pre-funding amount on a loan before it is released. Most other platforms release loans at say 4pm every day, but a prefunding method gives more people a chance to have a piece of each investment.
- Secondary Market available with discounting possible.
- You can also set up pre-bidding for investments appearing on the secondary market. A win-win: buyers don’t have to log in as regularly and sellers may get an almost instant sale.
The wide range of investment products and automated pre-funding sets Assetz Capital apart from the other P2P lending platforms. The automated system they have implemented for the manual account is very good and stops you having to rely on 3rd party tools to have an advantage to buy secondary market loan parts.
It may feel reassuring to have a provision fund, but this also reduces overall returns as the money that you set aside to cover loses is not invested and delivering returns. Instead, if you are able to diversify widely enough the returns net of defaults should average out higher and reduce the necessity for provision. For the GBBA investment product, the expected loss is given at 0.39% and coverage at 3x, so by my reasoning they have 1.17% of invested funds sat there ‘not working’. Assetz say:
At Assetz Capital we believe that just under six in every 100 loans will have future problems in normal economic conditions and this is in line with credit rating agency data for SME business lending. This is known as the probability of default. Some of our borrowers have as high as a 10%chance of having problems, some as low as 3.5%. On average it is currently around 5.75%.
On the same page, they state the average interest of the outstanding loan book at 10.6% per annum and expected losses on that at just 0.31%. So, if you were able to invest yourself through the manual investment product in a diverse enough range of loans, you would expect a return of about 10.3%. This is far better than the 7% of the GBBA and the GEIA, but it remains a risk that bad debt is higher than expected or you are unable to access enough lending opportunities.
A Crowd-Funded Platform
In February 2015, Assetz Capital offered direct investment in its platform via the Seedrs website. On Seedrs they managed to raise investment of over £3.2 million. Reading through this listing you get an honest insight into the platform’s strategy and where they make money. At this stage, Assetz charged the borrower between 5% and 8% to arrange and monitor the loan. Their loan origination target of £1billion by the end of 2016 we now know was overly optimistic, as this number was closer to £200million.
My Other Assetz-Specific Comments
Assetz Capital use a unique system to try to fairly and simply manage secondary market investments. On the upside this means that you can set your targets for investment on the secondary market and let the system do the hard work of buying what you want. On the downside, the system often allocates the tiniest loan parts, sometimes fractions of a penny. If you wanted to do your own manual checks in Excel for example, this makes it a bit harder. I would have preferred some sort of minimum investment, perhaps £1 with a lottery to see who gets it.
In my opinion having the 3.75% paid on your cash deposits that are waiting to be invested is a genius move from Assetz. Other platforms either pay nothing on waiting funds (e.g. Lending Works), or pay the full expected interest (e.g. Landbay). The balance Assetz Capital have keeps lenders happy but doesn’t commit them to paying large cashbacks or other incentives.
Assetz Capital is a well established platform with a wide range of investment products. If you want a hands-off approach, the provision fund protected 7% returns from the GBBA and GEIA accounts is higher than other large platforms like Ratesetter (around 5.5% on 5-year, with provision fund) , Zopa Plus (just over 6%, unprotected). Even Funding Circle now ‘only’ expect returns of 6.9%: this is with no provision fund and against historical returns of 7.1%.
On the automated products, the 3.75% easy access returns are fast and accessible. It’s great that you can set it to automatically take money from this account and reinvest when a higher paying alternative comes available, rather than have your money sat earning nothing. On the other hand, the higher return accounts at Assetz Capital have a longer investment drag and taking this into account you may not see the 7% return for the first few months.
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