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Assetz Capital PLUS Rating Update
Assetz Capital was one of the businesses that temporarily paused P2P lending last year in order to offer businesses government-backed pandemic loans, which weren't available as P2P.
It's now reopening its P2P lending, but it could be some weeks before lenders can put new money into its lending accounts and get lending. Assetz Capital says it needs a bit more time to approve enough of its pipeline of new loans. Existing lenders with cash waiting to lend will be the first to be able to lend in new loans. After that, new money and new lenders will be able to lend.
Still, we have sufficient information and data to assess Assetz Capital's lending accounts for 4thWay PLUS Rating and Risk Score purposes for the restart.
Assetz Capital's 4thWay PLUS Ratings
In our latest assessment, Assetz maintains its 4thWay PLUS Ratings on all four of its current lending accounts. Its 4thWay PLUS Rating is the top one at 3/3 “Exceptional”.
As a reminder, this means that lenders spreading their money evenly, today, into many loans in a basket of similarly rated lending accounts, including an Assetz lending account, can expect to end with positive returns by the time the loans are repaid, even if there's a major property crash and severe recession at the same time. The assessment is based on detailed data provided regularly by each P2P lending or IFISA provider and using a stricter version of the calculations global banks are required to do.
The starting point of 4thWay's ratings calculation is the proportion of loans that ever turn bad or are currently late. Unsurprisingly, 15 months into a pandemic, more of those things have happened recently at Assetz Capital.
Yet, even without making any adjustment to account for the fact that recent past loans had an uptick in problems due to the pandemic, our calculations still show that, if another downturn follows in quick succession, Assetz' rating is justified when putting money in today.
Manual lending account
In the case of Assetz Capital's manual lending account, also available as an IFISA, the reason for its top rating is a combination of the decent interest rates you earn on individual loans combined with the decent property security on most loans.
When using this account it's essential that you spread across lots of loans, taking the time to drip money in if necessary. This is because many Assetz Capital loans suffer problems at least temporarily and some will incur permanent losses, despite the security. But over a basket of loans the interest you earn is substantial and easily compensates for the risk of losses on some loans.
Assetz Capital currently has three auto-lend accounts, paying different rates depending on how long you're willing to wait for your money back. These accounts are available as IFISAs, too.
They pay considerably less interest than the manual lending account, but they come with reserve funds to cover missed payments and ultimately to contribute towards reimbursing lenders if a bad debt occurs.
While we at 4thWay really wish we had more information about the reserve funds, we're confident enough about their ability to take a substantial hit over the course of a recession or property crash, right through its aftermath.
The manual lending account likely provides better cover against losses and is more transparent, but it's much easier to spread your risk with the auto-lend accounts.
Assetz Capital's 4thWay Risk Score
All Assetz Capital's current lending accounts involve lending in the same kinds of loans, so they all have the same risk score. Unlike 4thWay PLUS Ratings, 4thWay Risk Scores are just about the risk. So they're not about whether interest earned is likely to more than cover any risk.
Assetz Capital's 4thWay Risk Score remains unchanged at 5/10. This is an attractive score for any investment, when you consider that 1/10 is the same risk as savings accounts (i.e. it's impossible to achieve when lending or investing), whereas 7/10 or 8/10 is roughly equivalent to stock-market index trackers, which are the lowest-risk way to invest in the stock market.
Assetz Capital's level of risk sits nicely in between these levels.
So, with lending interest rates at Assetz Capital starting from around 4% (in its auto-lend accounts – with reserve funds on top) to an average of around 7.5% in manual lending, a 5/10 Risk Score reflects a very nicely contained level of risk.
Our worst-case (I'd almost go so far as to say “mean”) 4thWay PLUS Rating and 4thWay Risk Score calculations put overall losses over the full life of the loans during terrible conditions at a couple of percentage points less than the interest earned, so still leaving a margin of safety.
Assetz Capital Review
With Assetz Capital not quite ready to reopen fully, we're waiting a few more weeks before putting it back up in our comparison pages. When we do, you'll find a freshly updated and much more detailed Assetz Capital review, with a summary of our extensive research into this P2P lending company and its lending accounts. We'll let you know when it's been updated in our monthly newsletter.
Go to the 4thWay comparison tables.
Independent opinion: 4thWay will help you to identify your options and narrow down your choices. We suggest what you could do, but we won't tell you what to do or where to lend; the decision is yours. We are responsible for the accuracy and quality of the information we provide, but not for any decision you make based on it. The material is for general information and education purposes only.
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The 4thWay® PLUS Ratings are calculations developed by professional risk modellers (someone who models risks for the banks), experienced investors and a debt specialist from one of the major consultancy firms. They measure the interest you earn against the risk of suffering losses from borrowers being unable to repay their loans in scenarios up to a serious recession and a major property crash. The ratings assume you spread your money across hundreds or thousands of loans, and continue lending until all your loans are repaid. They assume you lend across 6-12 rated P2P lending accounts or IFISAs, and measure your overall performance across all of them, not against individual performances.
The 4thWay PLUS Ratings are calculated using objective criteria that can be measured and improved on over time, although no rating system is perfect. Read more about the 4thWay® PLUS Ratings.
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