By Daniel Lanyon on Friday 27 January 2017
The Seattle based platform LendingRobot has launched an investment fund that it says is the first p2p and marketplace lending portfolio, fully automated and also utilising a distributed ledger system.
LendingRobot, an automated ‘robo-advisor’ for investors in marketplace and P2P lending is launching a new hedge fund called LendingRobot Series.
LendingRobot is a fully automated investment service for alternative lending platforms including Lending Club, Prosper and Funding Circle. After signing up for a LendingRobot account, investors select their risk tolerance and enable LendingRobot to instantly make investments on their behalf. Based in Seattle, Washington, LendingRobot serves 6,500 clients totaling over $120M in assets.
Designed as an alternative to traditional fixed income investments, the new fund uses the automation of robo-advice strategies combined with blockchain technology to make investments in alternative lending. The firm says this increases simplicity, diversification, transparency as well as making the portfolio more agile.
Blockchain technology and its “sophisticated machine learning algorithms” help to provide superior, and more predictable returns uncorrelated to stock market performance, the firm says.
“Alternative lending proved to return excellent performance and with new origination platforms growing quickly comes the opportunity to diversify further. But fragmentation makes investing even more complex for individual investors” said Emmanuel Marot, CEO of LendingRobot.
LendingRobot Series charges 1 per cent of assets under management, and caps fund expenses at 0.59 per cent.
“Turmoil within the past twelve months among some of the largest origination platforms showed that ‘platform risk’ is real, and left many clients increasingly worried about investing only in unsecured consumer loans despite the fact that the returns have remained steady,” addded Marot.
LendingRobot manages investments across four different Series, with target maturity going from 20 to 36 months, and net returns up to 9.66 per cent. Investor’s money is converted in to units of ownership in these Series, that are issued on a weekly basis. By default, loans payments keep being re-invested and the units' value increases.
The firm, in turn, publishes every week a detailed ledger of its holdings, down to the value and individual payments made by each note.
Investors can redeem their units in the fund on a weekly basis and the firm says “under normal circumstances” investors should be able to cash out entirely in less than 3 weeks.