Assetz Capital Review – My Lending Experiences After 2+ Years

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Assetz Capital Review

** Assetz Capital Review updated June 22nd 2017 **

News: Assetz Capital’s new Property Secured Investment Account is now available.

I have been investing my own money into Assetz Capital since June 2015 and am very happy with the results, so much so that the company is included on my Top 5 Peer to Peer Lending List. Assetz Capital has six 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 June 2017 Allocation: Unchanged
My current rate of return: 9.48% (Net return after bad debt and fees but before tax)
My current loans in default: 1 out of 111 loans
Est. Annual Returns:6.5% - 18%
My Risk Rating *:
Launched:2013
Early Exit:
Autoinvest:
ISA Available:
X
Loan Security:Property, debentures, personal guarantees
Provision Fund:
On all accounts accept the MLIA
Lender Fees:None
Min Investment:£0
Time to Become Invested:Varies on loan availability
Time Needed Managing:
Low to Medium
Lending Agreements With:Borrowers
FCA Regulation:Interim
Cashback Offer:
Sign Up For A Free Account

* 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.

The Assetz Capital Review – What You Need to Know:

Pros
  • Most loans secured by property and amortise
  • Competitive lender interest rates
  • Strong underwriting team
  • Large loan book on target for £1bn by 2019
  • Pre-funding for new and existing loans
  • Constant transparent loan information and monitoring / stress testing
  • Multiple account offerings for hands-off investing
  • Low default rates and good recovery history
  • Liquid secondary market for early exit
Cons
  • Confusing website for beginners
  • Tricky to figure out where hands-off account funds are invested
  • Hands-off accounts can earn nothing while money is in queue
  • Can take a while to become fully invested due to high lender demand

Assetz offers attractive 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 six 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. Thinking about investing some cash through Assetz Capital? Read on for my unbiased Assetz Capital review.

Equivalent Competitors:

Funding Circle, Ablrate, Rebuilding Society, Lending Crowd

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 GPS days). After a few weeks of being annoyed and confused, I finally broke down and spoke to friendly Assetz Capital staff member and after the explanation, the system became clear and I placed my first few investments through the Manual 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 mostly 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 invested in the Quick Access Account which pays a target 3.75% p.a. interest return.

If you want to get the highest returns, the Manual Account is the best option but it does require some hands-on time picking out new loans and monitoring older 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. Assetz Capital also offers four five accounts that hold baskets of loans designed to be hands-off for a reduction in returns. Every loan is secured by a mix of property, equipment or debentures.

How Can I Contact Assetz Capital?

Email: invest@assetzcapital.com
UK Tel: 0207 78707023

When Did Assetz Capital Launch?

February 2013

Are They Regulated? 

Yes, by the UK Government’s Financial Conduct Authority under interim permission. FCA regulation is nothing like the FSCS (Financial Services Compensation Scheme), which covers consumers when they deposit money in banks. The FCA does have the ability to pursue criminal action against companies which violates its standards, but the FCA is not a government entity and it’s funded by the very companies it regulates.

How Do I Open An Account?

Sign up here for a no obligation account Assetz Capital Account. (This is referral link which doesn’t cost you anything. While Assetz Capital pays me a fee for providing them with quality investors, my review is unbiased and based on my own experiences lending my own money. When you support me by opening an account through this link, it enables me to continue to operate this website and provide new in-depth company reviews.)

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, copy of drivers license or a utility bill.

How Much Time Will It Take To Become Invested?

Under normal market conditions, you can become invested in the Quick Access Account very quickly. 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.

What’s The Minimum Deposit / Investment?

See account descriptions below

How Are Deposits Made?

Via bank transfer which usually takes 1-2 business days.

Does Assetz Capital Offer An Innovative Finance ISA?

Not yet but once Assetz Capital becomes a full member of the Financial Conduct Authority, it will be able to offer the new IFISA. I predict this should happen in 2017.

How Much Interest Does Assetz Capital Pay Lenders?

Annual gross return rates range from 5.5% to 18%, depending on the risk level and loan type. Interest rates have recently fallen recently and the new norm for new loans will be between 6.5% and 10% range. I am still able to buy secondary market loans that pay 10%+.

Is Interest Accrued Immediately Or When the Loan Starts?

On new loans, interest accrues once the money is received (drawn down) by the borrower. On secondary market loans, interest accrues once the loan is allocated. On the autoinvest account accounts, interest accrues once your money is deployed. Interest accrues as soon as your money is matched to a loan.

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 between the investors and borrowers.

What Are The Fees?

Currently Assetz Capital doesn’t charge any lender fees.

How Much Time Is Needed Managing My Account and Investments?

This depends on which accounts you choose to invest your money 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
Green Energy Income Fund (GEIA): No time needed once invested
Manual Loan Investment Account (MLIA): Low to medium amount of time needed analysing new loan offerings and buying and selling 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 a reasonable loan-to-value percentage. 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 6% of its loans to default and a 0.46% expected loss rate during normal economic conditions. Default rates on my loans have been low so far. Default rates can change so please check the current default rates 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 six account / investment options. Four of the five accounts have targeted interest rate returns achieved by investing into baskets of loans given to borrowers.

1. Quick Access Account (QAA) – £1 min, £100,000 max investment

 

Assetz Capital Review
Assetz Capital has (in my opinion) revolutionized some the biggest challenges with peer to peer lending by introducing the Quick Access Account (QAA), which solves two 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 a return rate of 3.75%. The QAA is also covered by a discretionary provision fund which aims to cover missed interest or capital repayments usually as a result of defaults. 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 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 is basket type fund that holds loans of between one month and five year durations. When money goes into the QAA (investor deposits), the QAA buys loan pieces equivalent to the deposit and that’s how it’s able to pay a return. When money goes out of the QAA (investor withdraws), the fund either draws on its cash reserves or it sells enough loan pieces to fund the withdrawal. So “normal market conditions” assumes that the QAA 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 very 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:

Assetz Capital Review

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:

Assetz Capital Review

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

 

Assetz Capital Review
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 4.25% with a minimum of 4%. 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


Assetz Capital Review
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. The account is also covered by a discretionary provision fund (read more about the discretionary part here). It also offers automatic reinvestments of repayments.

I’ve done some testing and have been able withdraw funds from the GBBA within a few hours. Supply and demand can change this at anytime. Here’s how to make a withdraw:

Assetz Capital Review

The GBBA is not without its downsides:

If there are large amounts of say only three loans available, all of your money could be placed into 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 buy-to-let residential property loans, so you are giving up some diversification.

In my experience, idle GBBA funds are allocated in reasonable timeframes, 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 isn’t worth for me.

4. The Property Secured Investment Account (PSIA) – £1 min, no current max investment

 

Assetz Capital Property Secured Investment Account

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:

Assetz Capital review

Just like the GBBA account your money is spread across available loans. So for example, if there are only two available 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 Green Energy Income Account (GEIA) – £1 min, no current max investment


Assetz Capital Review
This account operates in a similar way to the GBBA except it invests in green energy business loans that operate wind turbines, solar projects and bio mass burners. All loans are secured by such things as land, future income and energy assets.

Money withdrawal operates in the same way the GBBA and Manual Loan Accounts work. If there are other lenders who want to buy your loans, you can exit immediately.

I personally don’t invest in this account as I invest in Assetz Capital’s wind turbine loans through the Manual Loan Investment Account as the loans pay between 9.5% and 10% returns. I would imagine as government subsidies on wind turbines end, green energy loans will become few and far between.

6. The Manual Loan Investment Account (MLIA) – £1 min, no current max investment

 

Assetz Capital Review
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 subpar 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 8-9% 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 a bit time consuming. Loan updates are posted in the Activity section under each loan:

Assetz Capital review

Here’s how the MLIA account works. Upcoming loans are listed here:

Assetz Capital ReviewLoan information including documents and security is here:

Assetz Capital Review

Here’s where you decide on your investment amount:

Assetz Capital Review

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 and Green Energy 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.

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 maintain quality and 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.

Security

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.

Growth

Assetz Capital is a profitable company which has been growing at a strong rate annually. In fact they expect their loan book to reach £1bn by 2019. The loan book also continues to grow and the quality remains good.

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. When the loan is released or available, 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

Asstez Capital recovery team works diligently to recover capital and interest on defaulted loans. As of April 18th 2017, 315 loans have been written. Nine defaulted loans have been fully recovered resulting zero losses for investors.

18 loans are still in the recovery process with a worst case capital loss of £1.2 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.

The Secondary Market

Assetz Capital has a no fee secondary market that remains quite liquid. Remember that the liquidity of secondary markets can change on any given day depending on economic news, how many investors are active and how many loans are available. For these reasons I usually don’t buy more of a loan than I’m willing to hold for the long term.

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 conditions / filters such as on a certain date, selling if a credit or monitoring alert arises and selling for a discount:

Assetz Capital ReviewThe secondary market is very intuitive and works well.

Provision Fund

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 thing for investors.

Most Loans Amortise

This means you receive interest and principle payments monthly. Each principle payment you receive on a loan reduces the amount needed to be collected in the even 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.

Communication

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 indicates 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:

  1. 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.
  2. Set your repayment / reinvestment options. Options are reinvest repayments and interest, withdraw interest or withdraw repayments and interest. Set this for each account you use

Some beginners are intimidated by Assetz Capital’s accounts but once you understand them and how they work, the choices are very simple.

Not Always Sure How Funds Are Invested

The GBBA, GEIA, 30DAA and QAA accounts use complicated algorithms to allocate funds and it’s difficult and time consuming tracking which loans your funds are invested into. For example, your entire GBBA allocation could be placed into two or three loans if that’s all that was available.

There could be scenarios where a large chunk of your money inside the automated accounts are invested into only a few loans.

“Discretionary” Provision Fund

Well done to Assetz Capital for including a provision fund, but the word “discretionary” means the 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 loses as it is the Directors choice.

Time Factor

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 favorable 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.


My Strategy

Investing in businesses can be tricky. I’m no accountant and evaluating company accounts and valuations isn’t something I enjoy. I place my faith into Assetz Capital team and stick with loans that make sense on paper and that are secured by property. 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 buy second charges as default repossessions on these can be tremendously problematic and drawn out. I tend to sell loans that are in the last month or that have any late payments. 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, 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 anything soon.


Sign up here for a no obligation account Assetz Capital Account. (This is referral link which doesn’t cost you anything. While Assetz Capital pays me a fee for providing them with quality investors, my review is unbiased and based on my own experiences lending my own money. When you support me by opening an account through this link, it enables me to continue to operate this website and provide new in depth company reviews.)

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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. **