Peer2Peer Finance News
The UK's first peer-to-peer finance magazine for investors and the industry
  • Home
  • News
    • Personal Finance News
    • Industry News
    • SME News
    • Global News
  • Property
  • IFISA
    • IFISA Guide
  • Video
  • Open Banking
  • Cryptocurrency
  • Features
    • Joint Ventures and Promoted Content
  • Comment & Analysis
  • What is P2P?
  • Partners
  • Events
    • Past Events
  • P2P Power 50
    • Power 50 2020
    • Power 50 2019
    • Power 50 2018
    • Power 50 2017
  • Sign up to our e-newsletters
  • Magazine
  • Directory
  • Jobs
  • My Account
    • Manage Account
    • Change Password
    • Log In
    • Log Out
Business Analytics and Data Management System (DMS) giving key insights for corporate strategy. Concept with expert analyst building visualization with KPI and metrics from database information
January 18 2021

4th Way gives its views on Zopa and Funding Circle returns

Marc Shoffman Industry News, News, Top 3 4th Way, Funding Circle, Neil Faulkner, Zopa

Peer-to-peer lending analyst 4th Way has described Zopa’s returns as ‘unexciting’ and has warned that some investors aren’t following the ‘basic principles’ when investing with Funding Circle.

The analyst has published reviews of the two P2P lending giants. While it praised the platforms’ management and level of returns, it said it is hard to properly judge them as they do not disclose as much data on loans and bad debts as they previously did.

4th Way removed Zopa’s Plus ratings in November, citing a lack of regular information.

The review, published today (18 January) said Zopa’s accounts would still get the full three star Plus rating based on current information.

However, 4th Way highlighted that Zopa is forecasting average returns for a middle performing investor of less than four per cent in its Core and Plus accounts for the first time.

Read more: Who are the ‘big three’ in P2P now?

“Interest rates are not exciting and lenders can expect some variability between their results,” Neil Faulkner, head of research for 4th Way, said.

“But this is one of the most competent and learned platforms available.

“Excellent at assessing rates and risk, and highly experienced in all aspects of their operations. It adds some useful diversification into a different kind of investment: personal loans. It would only look silly in your investing portfolio if you are going all out for high-risk, high-reward.”

Funding Circle’s rating were removed in 2018 when it stopped providing data, which coincided with when it became a public company.

4th Way’s Funding Circle review said that from the “limited figures” Funding Circle still provides, the average returns have remained distinctly positive.

It said the worst projected returns in recent years have come from loans that went live in 2017.

Funding Circle is currently projecting returns of 5.4 to six per cent for this year.

Faulkner said it is not surprising that investors complain about losses or issues accessing their funds, given the size of the platform, but suggested one issue may be a lack of diversification.

Funding Circle, and the wider industry, recommend a minimum investment of £2,000 so funds are spread across enough loans to manage risk.

4th Way suggests this doesn’t always happen.

Read more: UK operations help Funding Circle push for profit

“The sensible, and more knowledgeable, investors are lending at least £2,000 and committing to do so for quite a few years,” Faulkner added.

“They will also be quite relaxed about the precise date they will get all their money back.

“We’ve seen enough evidence at 4thWay to know that a good proportion of lenders don’t follow those basic P2P investing principles. It’s likely that a substantial number of those lenders will sell up at a loss.”

Faulkner cites an example of a prominent unnamed commentator who invested in just 20 Funding Circle loans and then complained that he had bad debts and sold for a loss a few months later.

“He really should have known better, and yet many individual lenders will not have his investing experience,” Faulkner said.

October heralds record December despite Covid-19 crisis CrowdProperty unveils board changes and hunt for CFO

Related Posts

Fintech. Financial technology text on virtual screen. Business, internet and technology concept.

Industry News, News, Top 3

Fintech lending can solve financial exclusion

stamp duty

Industry News, News, Property, Top 3

P2P platforms welcome stamp duty holiday extension

Hand of woman using smartphone on wooden table,Space for text or design.

Industry News, News, Top 3

Zopa exec “very excited” about embedded finance for lenders

Popular posts:

  • Chancellor unveils recovery loan scheme
  • The House Crowd goes into administration
  • Budget outlines plans for £15bn of green bonds in 2021
  • Sunak to announce stringent CBILS successor scheme
  • FCA warns The House Crowd investors against using…
  • BBB sets out further details on recovery loan scheme
Back To Top
  • Home
  • Contact
  • About
  • Team
  • Advertising
  • Subscribe
  • Privacy
  • T&Cs
  • Disclaimer

Follow Us on Social Media

© Peer2Peer Finance News 2020
• Additional design by