LendIt’s Peter Renton is Still Earning 8.72%August 25, 2016 | By: Sean Murray
LendIt, speaking to LendIt USA 2016 conference in San Francisco, California, USA on April 11, 2016. (photo by Gabe Palacio)
LendIt Conference founder Peter Renton made more from his marketplace lending investments in the last twelve months than some people earn in a year just from their nine-to-five job. $54,936 to be exact, according to his latest blog post detailing his performance. That’s a result of investments on the Lending Club platform, Prosper, P2Binvestor (which requires you to be an accredited investor), the LendAcademy P2P Fund (which includes Funding Circle, Upstart, Lending Club and Prosper), and the Direct Lending Income Fund managed by Brendan Ross (which invests with lenders such as Quarterspot and IOU Financial).
Unsurprisingly, his business loan performance through the Direct Lending Income Fund has earned the highest yield, a TTM return of 12.77%.
While reporters and critics seem to be planning the funeral for several lending platforms, Renton remains steadfast in his optimism. “Eventually, I plan to have a diversified seven-figure portfolio made up of consumer, small business and real estate loans,” he wrote on his Lend Academy website.
Though Renton is reaping the benefits of being a platform investor, it’s the platforms themselves that may be in trouble, according to a recent op-ed by Todd Baker, a senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard University’s John F. Kennedy School of Government. On American Banker, Baker wrote, “Almost all [Marketplace Lending] revenue is generated from ‘gain on sale’ fees earned from new loan sales. This dependence on origination volume and gain-on-sale margins makes MPL results exquisitely sensitive to macro and micro trends in investor demand and risk appetite.”
And if a platform isn’t sustainable, the theory is that future investment opportunities may not be as available as they have been historically.
“MPLs need to shift to a more sustainable mode — either as banks or as nonbank balance-sheet lenders — before the end of the current credit cycle brings on a real shakeout and the MPL experiment becomes a financial failure,” Baker wrote.
Renton himself acknowledged a downward trend in his yield, conceding that it may never return to previous levels. “While I would love to be earning more than 10% again I don’t expect to get back there any time soon,” Renton wrote.
He also recently rebutted a Bloomberg article that argued Lending Club was being shady with repeat borrowers.Last modified: August 26, 2016
Sean Murray is the founder of deBanked, an 11-year veteran of the merchant cash advance industry, a casual Lending Club and Prosper note investor, the co-founder of Daily Funder, an alternative lending speaker, consultant, writer, and enthusiast. Connect with me on LinkedIn or follow me on twitter.