This is an update to my December 2018 article about Defaulted Notes in Fundaztic. There are some changes that the platform made and new discovery that I found.
New definition of default
First, Fundaztic has reclassified defaulted note as a note that is 90 days past due, instead of 60 days as before. This reclassification commenced on 10 January 2019.
Nonetheless, the default rate has increased from 2.28% in my previous post to 2.83% on 15 March 2019. The amount in default has also increased by 56% to RM 1171597.03 (vs 750000).
My personal experience
Though the stated rate is still less than 3% (around 15 notes based on the total funded notes of 526), as See Pei mentioned in her comment for the previous article, the default rate of an individual investor could be much higher than official rate.
My own default rate is 4.17%, based on number of note invested (one out of 24 notes but two notes are late). If based on amount invested, it is 1.44%. However, I have two early repayments which provide me with the capital to invest in more notes.
Communication with investors
In the previous article, I mentioned that the frequency of communication for the defaulted note would be monthly. However, for my one defaulted note, I only received one email in November after it defaulted. I have not received any email since then. I am still waiting for an update on the defaulted note.
Conclusion
Though the platform changes its definition of default to the industry standard, it actually does not mean much to the investors. It simply means that the percentage of default will be lower based on the new definition. Honestly, I think that a note that is overdue for 60 days is at high risk of going into default anyway.
Anyway, in peer-to-peer (P2P) lending, diversification is the only way to minimize the risk of default. Based on its current default rate, another platform that I am using, Funding Societies has a lower default rate at the time of writing (0.83% on 15 March 2019). I suggest you to check it out.
Comments
Have you got any updates on your defaulted note? Would love to know.
Author
Hi, Yaz.
It seems like more of my remaining notes are heading into the default category. But there are also some notes that were restructured. Around 30% of my notes are in the default or write-off categories.