Assetz Capital Review
** Assetz Capital Review updated June 11th, 2018 **
I have been investing my own money through Assetz Capital’s peer to peer loans since June 2015 and am happy with the results, so much so that the company is included on my Top 5 Peer to Peer Lending List. Assetz Capital offers five different investment products which offer attractive returns to investors who lend against secured business and property loans.
Click here to listen / watch my podcast with Assetz Capital Founder & CEO Stuart Law.
My May 2018 Allocation: Unchanged
My current rate of return: 8.09% (Net return after bad debt and fees but before tax)
|Est. Annual Returns:||4.1% - 15.5%
|Recent Return Rate Trend:||↑|
|My Risk Rating *:|
|Loan Security:||Property, debentures, personal guarantees|
|Provision Fund:||On all accounts accept the MLIA|
|Time to Become Invested:||Varies on loan availability|
|Time Needed Managing:||None (auto account) to Medium|
|Lending Agreements With:||Borrowers|
|Bonus Offer:||No current offers|
|Cashback Sign Up:||Sign up for cashback|
* This opinion risk rating factors in types of loans offered, interest rates, platform history, default numbers and my own investing experience. My risk rating explained.
How Do I Open An Account? Any Cashback Offers?
Sign up now for a free account. No current bonus offers. (When you support me by opening an account through this link, Assetz Capital pays me a small referral fee which enables me to continue to operate this website and provide new in-depth company reviews. Thanks in advance.)
The Assetz Capital Review – What You Need to Know:
- Most loans secured by property and amortise
- Competitive lender return rates
- Strong underwriting and default recovery team
- Profitable company
- Large loan book on target for £1bn by 2019
- Pre-funding for new and existing loans
- Constant transparent loan information and monitoring / stress testing
- Easy to see which loans your auto-invested funds are invested into
- Multiple Provision Fund account offerings for hands-off investing
- Low bad debt rate and good recovery history
- Secondary market for possible exit of investment
- QAA Sweep function so idle funds are invested and earn interest
- Somewhat confusing website for beginners
- Lender rates are falling due to high demand and competition
- Time needed to manual invest and achieve best returns
- Auto investment accounts can take time to deploy your money
Assetz offers good lender returns through a good mix of secured small and medium business loans. I prefer Assetz Capital’s secured loans over Funding Circle’s mostly unsecured loans. It does take some time to learn how the website works, but once you learn the system, it’s relatively straight forward.
There are five different account options ranging from the Quick Access Account (aka QAA), which offers immediate money access during normal market conditions, to the new hands-off Property Secured Investment Account (PSIA). Thinking about investing some cash through Assetz Capital? Read on for my unbiased Assetz Capital review.
Assetz Capital Review: My experiences so far….
I started investing in Assetz Capital in June 2015 and to be honest, I didn’t really understand how their website or products worked. For me, calling a company to ask for guidance is worse than asking for directions at a petrol station (pre-Google Map days). After a week of being annoyed and confused, I finally broke down and spoke to a friendly Assetz Capital staff member and after an explanation, the system became clear and I placed my first few investments through the Manual Investment Account.
Prior to the addition of the Quick Access Account (QAA), there was a lack of new loans and my excess account funds sat idly by earning no interest. I constantly fought the urge to invest more than my comfort level in current loans but common sense and patience ultimately prevailed and while it has taken some time, I’m now invested in a diversified range of loans. I’m also comfortable sitting in cash if the new loans aren’t attractive. Idle balances are automatically swept into the Quick Access Account which pays a target 3.75% p.a. interest return.
I’ve also started using the GBBA auto-invest account when new manual loan rates are low, but if you want to get the highest returns, the Manual Account is the best option but it does require some hands-on time to pick out new loans and monitor existing ones.
What Is An Assetz Capital?
Assetz Capital is a true peer to peer lending platform that offers lenders’ investments in British business and property loans. Businesses can include manufacturing, industrial, wind turbines, law offices, hotels, restaurants, pubs, and property developers. For those who want a completely hands-off investment experience can choose from five different accounts that hold baskets of loans. Every loan is secured by a mix of property, equipment or debentures.
How Can I Contact Assetz Capital?
UK Tel: 0800 470 0430
When Did Assetz Capital Launch?
Are They Regulated?
Yes, by the UK Government’s Financial Conduct Authority #724996 under full permissions granted September 1st, 2017. Investments made through Assetz Capital are not covered under the FSCS (Financial Services Compensation Scheme). FCA regulation is nothing like the FSCS, which covers consumers when they deposit money in banks. The FCA reports to the UK government and has the ability to pursue criminal action against companies which violate its standards and codes of conduct.
Who Can Open An Account?
Any UK resident or non-resident with a UK bank account can open an Assetz Capital account. Residents of other countries who pass the security checks can also open an account as long as they have a UK bank account. Yes even U.S. citizens!
What’s The Signup Process Like?
Easy. You will have to pass the usual security checks by providing either a bank statement not older than three months, a copy of drivers license or a utility bill.
How Much Time Will It Take To Become Invested?
Under normal market conditions, you can quickly become invested in the Quick Access Account. The other accounts depend solely on demand and supply levels and which loans you want to purchase. It took me about two months to become fully diversified in the Manual Investment Account but demand and supply changes daily.
In August of 2017, I deposited some money into the Great British Business Account (GBBA) as a test and found it took five weeks to become fully invested in 31 different loans. When my GBBA funds were partially invested, the uninvested funds were swept and invested into the QAA account immediately. Again investment time varies based on demand and supply.
What’s The Minimum Deposit / Investment?
See account descriptions below
How Are Deposits Made?
Via bank transfer which has become much faster than when I first deposited. It took my deposit three days to be credited but now if you make a bank transfer using Faster Payments between standard business hours, you can receive your credit in as quick as one hour.
Does Assetz Capital Offer An Innovative Finance ISA?
Yes, it was released the week of December 18th, 2017.
How Much Interest Does Assetz Capital Pay Lenders?
Annual gross return rates range from 4.1% to 15%, depending on the risk level and loan type. Interest rates have recently fallen recently and the new norm for new loans will be in the 5.5% to 9% range. The secondary market still offers loans that pay 10%+ but they are becoming scarcer as rates fall and lender demand increases.
Is Interest Accrued Immediately Or When the Loan Starts?
On new loans, interest accrues once the money is issued (drawn down) to the borrower. On secondary market loans, interest accrues once you purchase a loan part and it is allocated to you. On the auto-invest accounts, interest accrues once your money is invested.
When Is Interest Paid?
Various times of the month depending on which investment product you select.
Am I Lending To The Assetz Capital Platform Or To The Borrower?
All loan contracts are directly between the investors and borrowers.
What Are The Fees?
Assetz Capital doesn’t charge any lender fees.
How Much Time Is Needed Managing My Accounts and Investments?
This depends on which accounts you choose to invest through:
Quick Access Account (QAA): No time needed once invested
30 Day Access: No time needed once invested
Property Secured Investment Account (PSIA): No time needed once invested
Great British Business Account (GBBA): No time needed once invested
Manual Loan Investment Account (MLIA): Medium amount of time needed analysing new loan offerings and buying and selling loans on the secondary market.
How Long Are The Loans?
Assetz Capital loans are 6-60 months but loans sometimes redeem earlier while others are extended.
What Security Does Assetz Capital Loan Against?
All property loans are secured by property at reasonable loan-to-value percentages. Business loans are usually secured by a combination of commercial or residential property, debentures and personal guarantees. I don’t think personal guarantees or debentures hold much security weight so I stick to loans that are secured by property or other disposable assets.
What Are The Loan Default Rates?
Assetz expects an average of 6% of its loans to default and estimates 0.46% expected loss rate during normal economic conditions. These estimated rates could be somewhat conservative however default rates on my loans have been low so far. Default and loss rates frequently change so please check Assetz’s stats page here.
What Happens If Assetz Capital Goes Bust?
If disaster strikes, Assetz Capital has a trust in place in which the trustees would have the power to appoint new managing agents to run down loans. While it’s certainly positive that investors lend to borrowers and not Assetz Capital itself, in reality, if the company went bust, no one really knows how lenders’ would be affected. It’s is all part of the risk of peer to peer lending. I recommend reading Assetz Capital’s Terms & Conditions here prior to investing.
What Are the Different Accounts and Investment Options Assetz Capital Offers?
Assetz Capital is unique in that it offers investors five account / investment options. Four of the five accounts have targeted interest rate returns achieved by investing in baskets of loans.
1. Quick Access Account (QAA) – £1 min, £200,000 max investment
By creating the Quick Access Account (QAA), Assetz Capital has solved two of the biggest peer to peer lending problems 1. idle funds making zero returns and 2. investors not being able to access funds.
Since loans can be paid off at anytime, it is likely you’ll have idle funds sitting in your account as you wait for new loans to be offered. These idle funds can be automatically swept into the QAA which targets an attractive annual return rate of 4.1%. The QAA is also covered by a discretionary provision fund which aims to cover missed interest or capital repayments. The provision fund coverage aims for 5% bad debt. In plain English, this fund is designed to cushion the QAA so investors can be paid the targeted return rate.
Withdrawing Money: The QAA is advertised as being instant access under “normal market conditions”. In order to understand what “normal market conditions” means and how it can affect you, it’s important to know how the QAA operates. The QAA holds a basket of loans with between one month and five-year durations. When money goes into the QAA, the account automatically buys loan pieces. When money goes out of the QAA (investor withdrawals), the fund either draws on its cash reserves or sells enough loan pieces to fund the withdrawal. So “normal market conditions” assumes that the QAA either has enough cash reserves or can sell loan pieces to fund the withdrawal.
Currently, the QAA has plenty of cash reserves so exiting isn’t an issue. However, if the economy were to crumble and lenders wanted out, it’s possible the QAA would cease to be instant access and your money could theoretically but tied up earning a low-interest rate. This is the risk that comes along with peer to peer lending. For now “normal market conditions” exist.
Another enticing feature of the QAA is that if you select “reinvest repayments”, all repayments will be automatically swept into the QAA:
When the QAA first opened, it was immensely popular and investment deposit amounts were capped, meaning you had to wait in a queue to become invested. Currently this isn’t the case and the cap has been removed. If the cap is reinstated, there is a nifty feature which shows you where you sit in the allocation queue:
The QAA could be used as an instant access bank account if you’re comfortable with the risk. Personally, I’m a big fan of the QAA.
One thing to note, if the money in the QAA is in the investment queue, then it won’t earn any interest. If you click on the “Your Transactions” link shown on the above image, you can see if your funds are being invested into loans.
2. 30 Day Access Account (30DAA) – £1 min, no current max investment
The 30 Day Access Account offers access to money under “normal market conditions” after giving a 30 day notice of withdrawal. Weirdly enough, you cannot withdraw money any sooner than 30 days, even if there are lenders waiting to buy. The account is covered by a provision fund and is made up of lower risk secured business loans that “have passed Assetz Capital’s strict credit policies”. This account operates almost the same way as the QAA operates except for the 30 day withdraw notice. This account also is advertised as holding a high cash reserve.
The gross annual target return is 5.1%. I personally don’t use this account at the moment as all my investing is done through the Manual Loan Investment Account (see below).
3. The Great British Business Account (GBBA) – £1 min, no current max investment
This account gives the investor a truly hands-off experience by investing funds into a basket of small and medium sized business loans. The GBBA operates similarly to the QAA and is made up of loans that “have passed Assetz Capitals strict credit policies” and are secured by appropriate company assets such as property, account receivables, and machinery. The GBBA offers diversification to investors in the way it tries to equally proportion its loan investments. For example, if there were 50 loans with availability, the GBBA would invest 2% of its money into each loan. If there were 5 loans available, then 20% of monies would go into each loan and so on.
I tested this account in September of 2017 and found it took five weeks to become full invested. My funds were spread across 31 different loans.
Unfortunately for new lenders, the GBBA Series 2 target return rate has fallen from 7% to 6.25% but this was to be expected due to increased peer to peer competition. Existing lenders will continue in the Series 1 GBBA product until their loans mature, at which point, new funds will be invested into the Series 2 product. Even with the interest rate drop, I still consider the GBBA to be a viable investment product due to Assetz strong business model.
The GBBA account is covered by a discretionary provision fund (read more about the discretionary part here), and offers automatic reinvestments of repayments.
I have been able to withdraw funds from the GBBA within a few hours. Supply and demand can change this at any time. Here’s how to make a withdraw:
The GBBA is not without its downsides:
If there are large amounts of say only three loans available, all of your available money could be invested across those three loans. If those loans were to default, then your returns could be severely affected.
The GBBA isn’t always open for immediate investment. Simply put if there’s no loan availability, then the GBBA puts your money into an allocation queue. This is true for new deposits and reinvestment of payments. The good news is you can set your idle funds to be invested in the QAA while they await investment into the GBBA.
The GBBA doesn’t contain any lower risk buy-to-let residential property loans, so you are giving up some diversification.
In my experience, idle GBBA funds are allocated in reasonable time frames, but experiences can vary depending on demand and supply. I use to invest small amounts in the GBBA but since it’s buying the same loans I can manually invest in, the reduction in the return rate wasn’t worth for me but if Manual loan rates continue to fall, the GBBA account will be a more attractive option since it requires zero management time.
4. The Property Secured Investment Account (PSIA) – £1 min, no current max investment
This account operates in the same way the Great British Business Account operates except the loans held within this account are property loans. Assetz has certain criteria that the property loans must meet to be included in the PSIA:
Just like the GBBA account, your money is spread across available loans. So for example, if there are only two available loans within this account, all your money could theoretically be spread across those two loans hindering diversification. I don’t use this account as the manual account offers the same loans with better rates.
5. The Manual Loan Investment Account (MLIA) – £1 min, no current max investment
This manual account is my preferred investment method. The account investors to manually choose loans which offer higher returns. Returns on newer loans have dropped due to market competition as Assetz Capital’s team isn’t willing to compromise loan quality by dropping underwriting standards and offering sub par quality loans. In other words, they don’t want to throw just any crappy loans on the platform.
If you perform due diligence and select sensible loans, I believe annual target returns should be in the 7-9% range. If you want to avoid defaults, you have to keep an eye on loan repayments to make sure the loans are current and this can be time-consuming. Loan updates are posted in the Activity section under each loan:
Here’s how the MLIA account works. Upcoming loans are listed here:
Here’s where you decide on your investment amount:
Pretty simple. Set your target investment amount and you’re done. I’ve always received my allocated target amount but this depends on demand and supply and how much you are asking for.
Early exit from loans is the same as the GBBA Accounts You click the sell button, set your sell amount and if lender demand exists, you can sell. Most of the older loans with higher interest rates are very easy to sell. The lower paying interest loans are much more difficult to sell since lenders’ are always chasing the higher return loans.
The Green Energy Income Account (GEA) – Now Closed
Due to a lack of new loan offerings, Assetz Capital announced the closure of the GEA account in May 2018 due to the lack of new loan offerings that would classify under this account. The GEA invested in green energy business loans that operate wind turbines, solar projects, and bio mass burners. All loans were secured by such things as land, future income, and energy assets.
Existing loans within the GEA will continue to earn interest, pay down capital or be recovered where needed.
WHAT I LIKE ABOUT ASSETZ CAPITAL:
Experienced Credit Team
I cannot stress how important this is. The Assetz team is constantly evaluating new loans and assessing risk to make sure quality loans are offered to lenders. What I truly appreciate about Assetz’s credit team is that they stress test existing loans on a regular basis by looking at borrowers company accounts and making sure borrowers are adhering to the loan stipulations. This way any potential issues that might affect future loan repayments can be identified and communicated to lenders.
Please remember that no credit team will have a 100% track record of underwriting good loans. Assetz Capital will still suffer defaults but their high-quality underwriting should help keep these default rates manageable.
Since all loans are secured by assets such as property, this makes lending somewhat safer. Having said that, securities are only as good as the valuations placed upon them and disposal ability, so it’s good to read the valuation documents to see if any red flags exist. There have been a few defaults on older loans where the accuracy of valuations was questionable, but this was the exception rather than the norm. Assetz Capital’s experience has grown and I think valuation mistakes will be fewer now.
Profitable Company That Is Growing
Assetz Capital is a profitable company which has been growing annually. They expect their loan book to reach £1bn by 2019.
In order for a peer to peer company to survive long term, it needs to operate profitably. If a company cannot achieve profitably, this might put lender’s loans and funds in jeopardy. Assetz Capital recently reported that between April 2016 and March 2017, they earned pre-tax profits in the seven-figure range. This is great news for lenders’ as it shows stability.
Loan & Account Diversity
Assetz Capital has a loan portfolio that offers investors opportunities to spread money without being too heavy in one sector or another. You can use the variety of account options to diversify your funds appropriately.
Lenders Can Preset Funding For New And Existing Loans
Peer to peer lending can be very time-consuming so Assetz’s pre-funding feature is a huge timesaver. Whatever loans you want to buy, you simply set your requested funding amount and you are finished. You can now do this for Upcoming and Pipeline loans:
Simply click the plus sign and set your requested loan allocation lending amount. When the loan is released, you will be allocated an investment amount. This amount varies depending on loan size and how much is available.
Low Defaults and Good Recovery Rates
Assetz Capital’s recovery team works diligently to recover capital and interest on defaulted loans. As of June 2017, 403 loans have been written. All twelve defaulted loans have been fully recovered resulting in zero losses for investors.
16 loans are still in the recovery process with a worst case capital loss of £1.743 million.
Those are encouraging recovery rates and as Assetz improves their underwriting quality (they’ve spent significant resources on improving their credit team), I imagine these recovery rates will stay stable or improve (assuming a stable economy).
You can see more statistics here.
Quick Access Account Sweep Function
This feature might be my favourite. There’s nothing worse than idle funds earning no interest creating cash drag. Assetz’s sweep function addresses this option by allowing investors to automatically place idle funds into the interest earning QAA account.
Here’s how you set this up from the main dashboard:
Easy To See Which Loans Are Held In Your Manual And Auto-Invest Accounts
It is now very easy to see exactly which loans are held in your auto-invest accounts. Click Loan Book Menu > Your Loans and then select the account:
If you used the auto-invest account such as the GBBA, it used to be very difficult to see which loans your money was invested in. Assetz has implemented a new feature which shows you this information when you click on an individual loan:
Alternatively, you can see your auto-invest loan holdings from the main dashboard here:
The Secondary Market
Assetz Capital has a no-fee secondary market which is useful for buying and selling loans. Remember that secondary market liquidity can change on any given day depending on demand and supply so there’s no exit guarantee. Knowing this, I usually don’t buy more of a loan than I’m willing to hold to maturity as
The secondary market is very easy to use. If you see a loan you want to invest in, simply set your investment amount and the website does the rest. You can set targets even if there aren’t any loan pieces available and when/if they do become available, the website will automatically allocate you loan amounts.
The secondary market also offers buying and selling filters such as selling on a certain date, selling if a credit or monitoring alert arises, and selling for a discount:
Four Assetz Capital accounts (GBBA, GEIA, QAA, 30DAA) offer investors an added layer of safety by providing funds up to a specified percentage of the total investments held in each account in case loan payments are late or missed or capital losses occur due to loan defaults. The provision account is funded by loan borrowers. Any extra added layer of safety is a good for investors’.
Most Loans Amortise
This means you receive interest and principal payments monthly. Each principal payment you receive on a loan reduces the amount needed to be collected in the event of default. This means that each repayment reduces your risk exposure. The loans which are interest only with a lump sum capital repayment at the end are clearly marked (usually the construction loans).
Deposits, Payments & Withdrawals
Deposits are made via bank transfer and usually show up within a few hours during normal business hours. Withdrawals usually happen within 2-3 business days.
Assetz Capital’s staff is very active in the peer to peer lending community which is very comforting. You can find them answering forum questions and they are eager to take suggestions and feedback from the very people who invest in their site. Good communications indicate a good company culture.
WHAT I DISLIKE ABOUT ASSETZ CAPITAL:
Website Can Be Confusing / Too Many Products?
When I first joined Assetz Capital, I was confused by the system and multitude of account choices. Instead of explaining why I’ll just tell you how to use the website:
Make sure everything in your Cash Account is allocated to go somewhere. If you don’t, your money will sit earning you nothing. You do this by selecting which of the accounts you want to use, and setting your preferred investment amount. Always make sure your allocated investment amounts are more than what’s sitting in your Cash Account.
Set your repayment / reinvestment options for each account you use. Options are to reinvest repayments and interest, withdraw interest or withdraw repayments and interest:
Some beginners are intimidated by Assetz Capital’s accounts, but it gets easier once you understand how the accounts work.
Lender Return Interest Rates Are Falling
As competition increases between the various peer to peer companies, I expect lender returns to fall. Assetz Capital lender rates have fallen since I first began investing. Rates of 10%+ used to be commonplace in the Manual Investing account whereas now rates of between 5% to 8% are becoming the norm. As expected the new GBBA account product has an interest reduction from 7% to 6.25%.
Auto-Invest Accounts Don’t Always Result In Good Diversification
As convenient as the hands-off accounts are, your funds may not be well diversified. Accounts such as the Great British Business Account (GBBA) only hold loans which meet certain criteria. This means not all Assetz Capital loans meet the GBBA standards so loan availability can be limited. This then means that your allocated funds can only be invested into loans that are available and could essentially mean that if only two suitable loans are available, your entire account could be invested into those two loans. From a diversification standpoint, this isn’t ideal. It would be nice if, in future, Assetz Capital allowed lenders to set a maximum allocation percentage allowed into each loan.
Auto-Invest Accounts Can Be Slow To Deploy Your Money
Assetz’s account such as the Great British Business Accounts work in relation to supply and demand. If there aren’t many available loans and too much investor cash, your money will sit idly by collection zero interest. Be sure to set the QAA account to invest idle funds so at least you are receiving some interest as you wait for your money to be used. You can see how to do this earlier in this article.
As a test, I placed some money into the GBBA account to see how long it would take for my money to be fully invested. It took five weeks to become fully invested into 31 loans.
“Discretionary” Provision Fund
Well done to Assetz Capital for including a provision fund, but the word “discretionary” means they can decide whether the provision fund will cover losses on a case by case basis. Worst case scenario and things are dire, the fund may not cover losses as it is the Directors choice. Most peer to peer companies use discretion on provision funds.
To maximize your Assetz Capital returns, you will need to use the Manual Investment Account which requires a time investment to filter out the lower quality loans; (thankfully most of the loans are good). It is wise to review all credit and valuation documents for each business you want to lend money to unless you plan on just spreading smaller chunks of money over many loans.
Remember company provided accounts and valuations can be subjective and sometimes, inaccurate. I do however think Assetz Capital’s credit team provides a high level of screening of businesses to make sure it presents favourable loans to its peer to peer lenders. If you don’t want to spend time reviewing businesses, either spread your money across as many loans possible or opt for the other hands-off accounts such as the GBBA.
Investing in businesses can be tricky. I’m no accountant and evaluating company accounts and valuations aren’t something I enjoy. I place my faith into Assetz Capital’s team and stick with loans that make sense on paper and that are secured by first charge properties. I look for adequate security with a fair loan-to-value ratio (under 70% on residential property, lower on commercial). I stay away from loans secured by second charges as default repossessions on these can be tremendously problematic. I tend to sell loans that are in the last month or that have any late payments. For now, I only use the Manual Loan Investment Account coupled with the QAA for uninvested funds.
The Assetz Capital Review Conclusion
Assetz Capital continues to be one of my favourite peer to peer lending options due to their diverse and high-quality loan offerings, exceptional team, competitive returns, securitization of loans, competent default recovery, multiple account options and strong business structure and fundamentals. I love the fact that the team continually monitors and stress tests loans to reduce the possibility of default. Being able to preset funding allocations for new and existing loans is a big time saver. I do not foresee removing my funds from Assetz Capital anytime soon.
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** This unbiased Assetz Capital review is for information purposes only and should not be regarded as investment advice. Opinions expressed in this Assetz Capital review are based on my own personal experiences, investing my own money. Peer to peer lending contains risks so never invest more than you can afford to lose. **