Defaulted Notes in Fundaztic

For every loan made, there is always a risk of default. The default rate as on 14 December 2018 in Fundaztic is 2.28%. The amount involved is more than RM 750000 (Link). Recently, there is a note in my portfolio that has defaulted. By Fundaztic definition, a note is considered as default when the borrower misses a payment for more than 60 days.

If a note has defaulted, does it mean that our invested money is lost? According to the platform, we still have a chance to get back our money.


Management of overdue notes

The platform uses two approaches (soft and hard) to handle defaulted notes. The first is collection (soft approach) and the second is recovery (hard approach).


Fundaztic uses the soft approach when the note is overdue for less than 60 days. With this approach, the platform is still trying to elicit payments by itself.


When the note is overdue for more than 60 days, the platform will take legal action against the borrower. Even if legal action is taken, the platform still welcomes the borrower to come forward and try to settle the matter.



Obviously, there will be costs involved in the process. Nonetheless, Fundaztic will bear the expenses first and we will only need to pay for these expenses if the recovery is successful. The fees will be deducted from the recovered amount and the balance will be returned to the investors.

If the process fails, we do not have to pay for the expenses. However, it will be a total loss for us then.


Communication with investors

During the debt recovery process, the platform will notify the affected investors through email. The communication is on a monthly basis till there are changes in status to the process.


Risk minimization

The risk of default cannot be eliminated completely. To minimize this risk, Fundaztic recommends a strategy of diversification. Specifically, the platform recommends holding a portfolio of at least 100 notes. However, this strategy requires an investment amount of at least RM 5000 (minimum investment amount per note is RM 50). So, this might not be achievable for some investors. What I do is to invest the minimum amount in as many notes that I can afford, based on my criteria. Currently, I have invested in 14 notes. Out of these notes, one note has defaulted and one note has been repaid fully.


My experience

For the defaulted note, I received an email after two and a half months of its first non-payment. I did not receive any notification during the collection period. It is exactly as what Fundaztic says it would do.

Currently I am still waiting for the outcome of the recovery process. I will write a new post when the process comes to an end.

[There is a new update to this article. Please click here to read.]


  1. Ng See Pei

    I have invested for about 6 months, from March 2018 to August 2018, as to date , I have 3 default notes out of 81 notes that I have invested, and currently 12 notes that I have in late payment, means potentially turn default. Quite disappointed with the rate of default and late payment. To me, I have about 18% of risk that’s why I have been stopped invest in new notes in this platform since September 2018. I don’t think they follow up on repayment is promptly. I do invest in other p2p platform, so far no notes turn default (touch wood). Relatively the default rate in Fundaztics is far too high for me.

    1. Post

      Hi, See Pei.
      Thanks for your feedback. So far I have only one defaulted note. Hopefully this is my only defaulted note.
      I have invested in lesser notes than you. But I have two early repayments. I will update again when I receive more information regarding the default.
      Thanks again for your feedback.

  2. josh

    Totally stopped investing on this platform total over 20% in defaults. The risk is too high your better off investing in crypto at least you know the odds are higher if you just hold long term.

    1. Post

      Hi, Josh.

      Thanks for your feedback. I have also stopped investing on Fundaztic and am investing on Funding Societies Malaysia solely for P2P lending now.

  3. Yaz

    according to their website, the past year’s default is around 2.2% (relatively low) and since inception is around 9.2% (relatively high, considering it’s already been ~5 years, meaning in the early days the default rate must’ve been way more). assuming in the early days the default rate was very high and now it dropped down to 2.2%, wouldn’t it mean that there has been a significant shift in the platform’s operations (due diligence & recovery) to have brought down the default rate very low therefore making it ‘safer’ to invest in? especially since the past year has been covid (more likely to SMEs to default) but they were able to still keep defaults low.

    1. Post

      Hi, Yaz.

      Perhaps you are correct. Fundaztic was able to recover part of my capital in some written off notes. But I have not invested on this platform for quite some time, so I am unable to form an opinion.

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