This article is an update to my previous article on two peer-to-peer (P2P) lending platforms. It is 2020 now and I am going to compare my investment performance on Fundaztic and Funding Societies Malaysia . As I do not have an accurate way of counting the return, I am going to use the data from the platforms directly.
Fundaztic
I have stopped investing in new notes since August 2019 on this platform. So, how does it fare? According to the platform, my average return on investment (Net Return/Total Invested Amount) is 24.31%. I will say this return is quite high.
However, my default rate (remaining principal) on this platform is 8.81% (default is 3.04% and write-off is 5.77%). Currently, I have a total of 19 notes with prompt repayment, four late notes, three defaults, four write-offs and two restructured notes. I have received full repayments from five notes. Its current since day 1 default rate is 8.60% (Link). The formula is provided by Securities Commission and it is as below:
Total Exposure of all Defaulted Notes (Outstanding Principal + Interest Due to Investors – Amount Recovered)/(Total Principal Amount Financed + Total Interest Payable to Investors for all Notes since Inception) x 100
Funding Societies Malaysia
The metric that Funding Societies uses to measure return is annualized portfolio performance. My performance according to the platform is 11.39%. That is the only figure that I could get.
The official since day 1 default rate is 2.54% (Link), using the same formula provided by Securities Commission Malaysia. My own default rate is 0.93%. I still have 35 ongoing investments. Out of the total 90 invested notes, I have two defaulted notes but the principals from one of these had been recovered. The remaining one defaulted note is in the recovery process. 53 notes had been fully repaid.
Comparison of P2P investment performance
As I do not have the same metric for these two platforms, I cannot compare them directly. However, my average remaining tenure on Fundaztic is almost two years, so I will assume my annualized return from this platform is 12.16%. Thus, its return is higher than Funding Societies Malaysia.
Nonetheless, the official default rate on Fundaztic is around 3.4 times higher than Funding Societies. Furthermore, my default rate on Fundaztic is even higher than its official rate (albeit the formulae are slightly different). My default rate on Funding Societies is almost 9 times lower than Fundaztic. I would say that the default rate on Fundaztic is very worrying.
My plan
Though the return on Funding Societies is lower than Fundaztic, I am going to choose it as my preferred P2P platform. This is mainly due to its lower default rate and its ability to recover the defaulted note. So far, the platform managed to recover my principal from one of my two defaulted notes.
As for Fundaztic, I am still in a bind. On the one hand, its return is high. On the other hand, Fundaztic has a very high default rate as you can see above. Nonetheless, the platform has decided to increase its fee from 1% to 2% for notes hosted on 1 February 2020 onwards. Thus, the return will be lower after the increase. With the current circumstances, I have decided to stop investing on this platform. Thus, I will shift my capital to Funding Societies or another P2P platform.
Referral link
Below is the referral link to Funding Societies. By clicking on this link, I may gain referral rewards from your registration with the platform. If you think I have done a good service in explaining the topic, please click on the link below if you have interest to register. Otherwise, you can always search Funding Societies Malaysia with Google and register yourself.
Funding Societies Malaysia: Link here – If you register and invest through this link, both of us will get RM 30*.
*Terms and conditions apply.
