Assetz Capital P2P Review – A Real Lenders Perspective (Updated June 2019)

By | 2nd January 2019

Summary: Assetz is a real ‘one-size fits all’ platform, offering a variety of different investment products under a few different asset classes. It is one of the more established platforms, has a good track record and deal flow is good, allowing for diversification. On the downside, Assetz has not been immune from very poorly performing loans, and interest rates are not as good as they used to be. That being said, I would expect Assetz to feature prominently in an established P2P lender portfolio.

Here is how Assetz compares to my other P2P investments:

PlatformLinkTarget Rate (%)My XIRR (%)Current (%)Live Rating
Review9-12%1.9% (est)0.55%0.5/5
ReviewUp to 16%-1.35% (est)3.8%1.5/5
ReviewUp to 7.2%5.44% (est)6.1%4/5
ReviewUp to 11%6.5% (est)5.37%4/5
ReviewUp to 13%7.8% (est)6.0%3/5
ReviewUp to 8.5%8.7% (est)7.4%3.5/5
LATEST UPDATES

JUNE 2019 UPDATE: The seed capital round is still open and is now in overfunding – a decent result for Assetz.
MAY 2019 UPDATE: Assetz are raising another round of capital on Seedrs. It could be read either way, but I am inclined to think it is an encouraging sign.
MARCH 2019 UPDATE: No change. Assetz have settled a large loan in favour of investors after accepting errors in their process – that is encouraging. Many other platforms would simply use silence.
FEBRUARY 2019 UPDATE: No change.
JANUARY 2019 UPDATE: No change.
DECEMBER 2018 UPDATE: Nothing new to report here. My XIRR is slightly lower than other platforms due to holding monies in lower-paying products.

What is Assetz?

Assetz are one of the mature platforms in the P2P industry, having being founded in 2012, and one of the pioneers behind asset-backed P2P lending, hence the name. Whilst competitors Ratesetter and Zopa were well-established, these platforms concentrated on lending to individuals. Therefore by targeting loans to SMEs (small to medium enterprises) and for property developments, a new market was formed.

Given that many businesses took out Assetz loans because mainstream banks would not fund them, interest rates were extremely high, with double digit returns not uncommon. This in turn attracted lenders to the platform. As of today the platform makes over £100m of loans a year.

Unlike many other platforms, Assetz has many different investment products to choose from: a self-select product whereby you pick your own investments, as well as a variety of black-box accounts – one targeting businesses, one property, an instant access account, and a 30-day access account, which pay different rates of interest. You can also hold investments inside a SIPP or ISA.

In recent times the types of loans have swung heavily to being backed by property, so residential/commercial bridging, development or refurbishment loans are common here, with the unsecured business loans (such as those seen on Funding Circle) dying out and being less common.

Here is a table showing Assetz Capital’s features:

Established2012
Advertised Returns5%-15%
Loan TypesProperty/SME
Loan SecurityProperty, Debenture, Assets
Minimum Investment£1
DragDependent on account
Secondary Market?Yes
FeesNone
Provision Fund?Only for auto-invest
Auto Invest?Yes
Available in ISA?Yes
FCA Authorised?Yes
Active on forum?Yes
Sign-up offers?Up to £350

Operating Model

This is not complicated. Once an account is opened and you have been verified, you can add money to your account via bank transfer. This sits in your Cash Account on Assetz initially, until you decide what you want to do with it. Money can be allocated to different accounts, in whichever proportion you wish. The current options are:

  • Quick Access account (paying 4.1%)
  • 30-day Access account (paying 5.1%)
  • Property Secured Account (paying 5.5%)
  • Great British Business Account (paying 6.25%)
  • Manual Lending Account (variable interest, depending on loans)

It should be noted that these are target rates and not guaranteed. Furthermore, withdrawing out of the Quick/30-day accounts is subject to ‘market conditions’ (although there have been no problems so far). Loan interest you receive can either be re-invested, or withdrawn back to your cash account, where you can either invest in another product or withdraw to your bank.

As you may guess, the interest rates vary according to risk. The highest paying loans would be found under the manual lending account. Most of the higher payers are business loans, carrying the most volatility.

Assetz have been known to run various promotions at different times of the year giving bonus interest on different accounts. If you have a decent sum to invest, it may be worth waiting for a promotional period to come around.

How are funds protected?

Money loaned out is secured with assets – be it property or other business assets, and guarantees if applicable. A conservative 70% loan to value is used for property, which should provide some comfort should a project go wrong. There are no provision funds on Assetz for any account aside from the Great British Business Account which benefits from a discretionary fund to cushion losses.

Pros of Assetz Capital

There are a few things to like about this platform:

Variety of loan accounts: It is a good thing to have a nice variety of loans products to invest in, which allows investors to tailor investments to their own risk appetite.
Competitive Interest Rates: It is rare to see very large interest rates here, but at the bottom end of the market, the rates are good. The Quick Access account rate is better than both comparable products in Ratesetter and Zopa.
Good deal flow: It is possible to see what deals are in the pipeline for self-select customers, and there are plenty of opportunities to invest.
Secondary Market: There are no fees charged on selling loans. Some loans are very liquid, meaning an almost instant cash-out.
Good track record: Assetz have been around for some time and enjoy a good record. Assetz are also proactive on some forums and operate a Q&A section on each loan, allowing lenders to ask questions.
Good promotional offers: There are often good offers to sign up, and for existing customers.

Cons of Assetz Capital

However, this should be weighed up against some bad points:

Falling interest rates: Perhaps as a result of competition, rates are falling and have been for some time. The loan book statistics point this out nicely (see below). It would be rare for loans to get into double digit returns today.
Bad diversification: A problem with the auto-investing accounts (both business and property) is that not all loans qualify for it. This can result in some very volatile results if you are unfortunate enough to hit some of the bad loans.
Cash Drag: Another problem for new lenders may be cash drag. The auto-invest accounts only deploy cash when a loan is available. For the self-select accounts, the pipeline of loans can be quite slow to draw down.
Bad loans still possible: The nightmares seen on other platforms are possible (and have happened on Assetz): some loans feature second charges or only debentures over business assets, large losses are possible on these.

Declining returns and a change of strategy

The first point is of most relevance to lenders. As we can see, the returns have declined as such:

The reasons for this seem to be fairly straightforward: new lenders have made capital easier to access which has pushed down rates across the industry particularly for the better loans. Another reason is that Assetz have greatly reduced (or pulled out of) business lending, which has caused them plenty of problems in the past. If you look at the manual loans, the highest paying loans are all business loans.

My Assetz Capital Investment Strategy

I quite like the Quick Access/30-day Access accounts here, which offer a good level of interest. The risks here lie within the platform, so the same caveats apply to this money as any other: only invest what you are comfortable with.

I haven’t bothered with the auto-investing loans. Their interest rates are a tad lower than the self-select products, and I have heard some very poor stories about the level of diversification achieved in these products. I would place little faith in the provision fund here.

The self-select product is a good one for me, but still needs some careful handling. Like it was on Funding Secure, it is very tempting to sort the available loans by percentage and invest in the top ones, but this is fraught with danger. Many of my rules are the same as on other platforms such as:

Modest investment size: I aim for around 1% (or less) of my account in each loan. This is possible over time in Assetz because there are regular loans.
Read loans carefully: It is insufficient just to skim-read – read the details and ask yourself whether the loan could repay if things went wrong. Often in the case of property some values can be gleaned using Rightmove.
Avoid poor asset-backing: I avoid loans with bad asset backing such as a second-charge loan, or a business asset which is valued on a multiple of future income streams. In both these cases it is possible to face a very big loss, and quite often the interest rates do not reflect the additional risk.
Avoid low-interest loans: The constant decrease of interest has led to incredibly low rates, for instance commercial mortgages at 60% LTV paying 5%.

CONCLUSION

Assetz Capital are well regarded in the industry, and despite the inevitable irritations with problematic loans on the whole I feel they are competent and manage their loans professionally. Platform risk is also decreased with the fact that they are profitable (as of 2017). With a variety of loan products to invest in I feel that (as far as P2P places go) this is a decent place for the money.

Disclaimer: This article represents my own opinions and should not be substituted for investment advice. Please research before you invest with any firm. Typically P2P investments are not covered by the Financial Services Compensation Scheme (FSCS) in the way bank deposits are, and there are no guarantees that you will receive the returns advertised (or even a return at all).

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