Investing in p2p has been a fascinating experience for the last two years now. Being a Bulgarian citizen I started my p2p experience with the most obvious choice - to invest in Iuvo and Klear. Both platforms are Made in Bulgaria nevermind that Iuvo is formally registered in Estonia. Yet the major shareholders of Iuvo are Nedelcho Spasov and Ivan Zhelev - the main shareholders of MFG AD.
MFG is behind three of the originators listing loans on Iuvo - Easy credit, Viva Credit and Icredit. Iuvo marketing budget is less than well-established platforms in Europe such as Mintos and Bondora. Despite this, the result of Iuvo since its inception in 2015 is worth to be acknowledged.
So before I share my results with Iuvo since I first started to invest in mid-2017, let’s look at some data about the platform itself.
The total amount of invested funds since the beginning has reached nearly 90 Mio EUR up to this date - Nov 2019. This might not seem much when you compare it to other p2p platforms in Europe, but I personally think that this is a solid result considering both marketing activities. Moreover, you have to keep in mind a very unusual fact about Iuvo - each loan originator has to keep 30% of listed loans in their balance sheet.
That said...you have to admit that having 30% skin-in-the-game is quite a relaxing fact that the LO itself has quite a significant interest to sustain a healthy portfolio and it is a break to prevent aggressive lending and malicious practices in order to grow. Just take a moment to contemplate for a while...think about a situation where you will bear the risk to lose 10% or 30%? In which of those cases you will be more hesitant to lose money IF you were the loan originator? The answer is clear and this is one of the main advantages of Iuvo for me.
Let’s now look at the breakdown of invested funds on Iuvo. As of Nov 2019, you can see that almost 57% or almost 51 Mio EUR are invested in EUR and 42% or 37 Mio BGN. If you are wondering what the heck is BGN it stands for Bulgarian Lev /local currency in EU member state/. It seems counterintuitive at first to think about investing in BGN if you are not a Bulgarian citizen. Interesting to know is that the Bulgarian lev BGN has been pegged to the EUR since 2001 with a fixed exchange rate of 1.95583 BGN for 1 EUR.
Bulgaria has submitted documents to apply for ERM in order to adopt the EUR as the official currency and enter the Eurozone.
From the total loans listed on Iuvo since its inception, you could derive some conclusions about the volumes of operation.
Contrary to the previous statistic Bulgarian lev still holds the biggest chunk of loans listed on Iuvo. This could be easily explained because in the beginning Iuvo only offered loans from Easy-Credit, Viva Credit /both operating in Bulgaria/ and Icredit in Romania. This I believe is going to change in favor of EUR in the next 6 to 9 months.
The next graph is my personal favorite - the Maturity distribution of loans originated on Iuvo. As you can clearly see - short-term maturities are predominant. Almost 90% of the total amount of loans listed for sale is up to 12 months. This is the main business of the LO listed on the platform - short-term consumer financing.
Loans by score class are also interesting information to track down in order to reach some interesting future developments in LO’s. Is it disturbing that “middle risky class” loans are shrinking in “favor” of HR? Not really - at least for me. With my 2 years experience with Iuvo I have observed that 35% of the loans I am buying are defaulting...Yes, you got that right - 35%. And this is typically the case with LO’s granting express short-term loans. So to be able to evaluate your clients is crucial for your survival.
On the other hand, during the last 18 months, I have the impression that some of the LO’s listing loans on Iuvo are slowly entering the market for so-called bankable clients in order to expand their business and get some action also. LO are well prepared to deliver fast decision and this is an advantage in comparison with banks.
Reviews about the platform you could find on TrustPilot here.
Having seen some statistics, now let’s see some more about my investment strategy and setting of the Auto Invest option which Iuvo offers. You can see from both screenshots the main dashboard - both in EUR and BGN.
I have to mention that I’ve started investing in EUR for 6 months. Before that, I’ve invested only in BGN. And the dashboard in BGN looks like this
Since mid-2017 when I started using Iuvo for the first time I’ve begun investing in lev since it is the local currency. As you can clearly see - I’ve “missed” some potential yields and I don’t regret it. Currently, I am slowly building my portfolio in EUR and keeping that one in BGN as it is without adding money to it.
Opening an account is quite easy on Iuvo. You can deposit funds via Paysera, Trustly, Transferwise or just regular bank transfer.
You have to understand that the Net Annual Return which you see on the dashboard is not your actual return or WYSINWYG. Anyways I use XIRR to calculate my yields each month. For Oct 2019 Yield in EUR is slightly above 10% and in BGN is nearly 9%. These results are achieved mainly through Auto Invest strategies which are working without the necessity to spend time each day. Yet I have to admit that I’m occasionally checking the secondary market in Iuvo.
YES - Iuvo has a secondary market and it is working fine. If you want to sell all or just part of your loans you have to know that Iuvo has a fee of 1% calculated on the principal due. So IF you put your loans for sale with a 0.5% discount, the overall “loss” will be 1.5%. Perhaps it doesn’t make sense if you have experience with other p2p platforms. I personally find it reasonable and haven’t used the secondary market to sell my portfolio.
Withdrawing - I have tested the option to withdraw available funds from Iuvo, but only in BGN so far. In both cases I have put my order to withdraw money at around early morning 7-8 am and I have received the money on the subsequent day. Perhaps this feature could be improved in the future.
Money exchange within Iuvo without the necessity to go through all the hassle. Well, Iuvo doesn’t offer the option for FX deals between currencies yet, which could be a nice income generator for the platform itself and thus could make it easier for an investor who want to switch currencies. If you are investing only in EUR I guess this doesn’t concern you a lot.
Cash drag - Does it happen? The answer is Yes. It happens from time to time in both currencies for several days sometimes.
I don’t want to make a big fuss out of it and neither should you. Money sitting for a few days is not an issue and shouldn’t bother you at all. The cash drag also depends on the setting of your personal Auto Invest settings. So let’s take a look at mine in EUR first.
Let’s break it down:
Max of 10 EUR in one loan
Score class - from A to HR
Remaining installments - at least 1 not more than 20
Paid installments - at least 2 - max 4 - I don’t want to buy parts from loans where borrowers haven’t paid at least 2 installments
Loan status - Current ONLY. Loans with delays I prefer to buy in the secondary market if there is a discount.
Buyback guarantee - All three - 15, 30 and 60 days. Different loan classes have different buyback period. A and B class has 15 days after delayed payment and the BBG is activated
Installment type - ONLY installments with 7 and 14 days between each installment. I use this filter also in my BGN auto-invest strategy. I prefer to be able to capitalize within shorter periods than 30 days installment whenever possible.
Countries - Bulgaria and Spain
Originators - Easy-Credit, Viva Credit, Icredit and Ibancar.
Before I show you a screenshot of my Auto invest in BGN let me say that in contrast with most p2p platforms I’ve read about Iuvo DOESN’T pay interest for delayed payments. This has been the case since the very beginning. I am not going to advocate for the platform whether this is right or wrong. I just think that it is a reasonable decision since they require each LO to have 30% skin-in-the-game of each loan. It is a trade-off between risk-return for me.
You have the option to receive interest on delayed payments on other platforms which creates risk for the LO itself in case they can’t recover the receivable from the end customer. But in all those cases LO’s are staking 10% skin-in-the-game, so...again it is a trade-off - nothing more.
So let’s see my filters for the auto-invest strategy in BGN.
Many of the filters are similar to EUR ones with the exception that
Max investment in one loan is 15 BGN / 7.5 EUR
Score Class - ONLY D,E,HR without A,B,C
Buyback guarantee - Only 60 days as it comes the only available one with the score classes
Everything else is the same - installment types - Only 7 and 14 days
Country - As you can imagine only Bulgaria
Iuvo’s referral program. Unlike many other p2p platforms out there Iuvo is also different from their approach to referral programs. You don’t have the option to share a link and then get a bonus if someone signs up from your link. You do have the option to send an invitation to a friend, but you have to be a registered investor already and logged in./ the option to send invitations through e-mail was not working during weekdays - maybe they’ve fixed it/.
The referral incentive is good though. Both invited and invitees get 30 EUR bonuses if the invested amount is up to 1000 EUR and 90 EUR bonus if the invested amount exceeds 2500 EUR. The money is debited to your account instantly.
All in all said let me summarize shortly pros and cons about investing in Iuvo:
* Financially stable originators Easy-Credit, Viva Credit, Icredit/ thus shareholders - I consciously take the related parties risk/ with a solid track record dating back to 2005, expanded through the last financial crisis and being profitable since inception
* 30% skin-in-the-game - a major plus for Investors. Just look at Mintos and some cases such as Rapido finance
* Reasonable returns - between 8 and 10% plus Iuvo is paying penalty fees for delayed payments when borrowers do catch up or pay their delayed installments
* Major shareholders of Iuvo are also shareholders of Easycredit, VivaCredit, and Icredit. Running a successful originator is a benefit because you have insights and know-how to perform thorough due-diligence of other originators and the screening process should be more reliable than p2p platforms without such an experience.
* Transparency about Iuvo’s financial performance. The platform has consistently “denied” to share their financial performance and you have to pay in order to get their financials from Estonian trade registry
* The low number of LO’s. I find this OK when you consider 30% skin-in-the-game Iuvo is requiring from each LO.
* Not paying interest for delayed payments. For some investors, maybe this is a NO GO deal. For me personally - I’m fine with it.
* Loans listed on the platform are predominantly dominated by two Loan originators