First off, an update on my portfolio’s performance with Funding Societies Malaysia. Annualised returns have gone down from 13% to 9.23%.
A lower figure compared to January but still, a 9.23% return is commendable for an invesment.
Mainly due to –
1. A default; and
2. New unutilised capital.
My First Default(s)
It caught me off guard when I first received notice on the default on the issued notes, of which I’ve put in RM300 each into the affected notes.
Being caught off guard like that isn’t always a nice experience but it was mitigated somewhat because I’ve constantly been managing my own expectations and prepping for a few defaults.
Re-adjusting Funding Societies’ Auto-invest Bot
If you’ve noticed, all the notes come from a single issuer or company. So it’s back to the drawing board for me.
I’ve now switched my auto-invest bot settings to have ‘Max Issuer Exposure’ from the previous 25% to a mere 5%. I don’t want to be over-invested in one single issuer.
In the event that a single issuer defaults, my loss exposure will never exceed 5% of my total loan portfolio.
Steps Taken by Funding Societies
It all started on 7 January 2019. The issuer contacted Funding Societies to delay payment. Below will be the notices I received from Funding Societies. In chronological order.
This will be pretty lengthy but it is important you as investors know the step-by-step process taken by Funding Societies.
7 January 2019
Dear Investor, The Issuer has reached out to us to push back the repayment of January 2019 due amount because pending receivables from their client, this will include late interest charges. Tentatively, repayment of January 2019 due will be on 18 January 2019. Thank you for understanding the situation. Team Funding Societies 7/01/2019, 6.20pm
** And thereafter, lengthy amounts of back and forth discussions with the issuer on the settlement. I’ll spare you the details. With the issuer failing to make repayments in March, Funding Societies finally decided to serve a letter of demand.
10 April 2019
Dear Investor, We wish to update that we have served the Letter of Demand as of 8 April 2019. At this stage we continue to be in contact with Issuer through our lawyers to demand for RM 50,000 which due on 31 March 2019, and upcoming RM 150,000 which is due 15 April 2019. As we wait for Issuer response to the Letter of Demand, kindly allow us to update you by 17 April 2019. Team Funding Societies 10 April 2019, 8.30pm
18 April 2019
Dear Investor, We would like to inform you that Note Issuer has made a partial payment of total RM 10,000 and it has been distributed as principle to investors on 16 April 2019. However, the amount made by Issuer is less than what we have requested from the Issuer. We are still in the midst of negotiating the outstanding repayment term with Issuer. As per our last update, the Letter of Demand has been served to the Note Issuer, and the Note Issuer has only made payment of RM 10,000.00 of the promised RM 200,000.00 upon the expiry of the Letter of Demand on 17 April 2019. At the meantime, we are escalating our recovery efforts through legal avenues and are discussing with the appointed panel lawyer on how to approach this matter effectively. You may refer to your email for full update. Kindly allow us until 3 May 2019 to provide you updates on the progress of recovery. We truly appreciate your kind patience and continued support. Team Funding Societies 18 April 2019, 1.25PM
So there you have it. I’ve said there would be defaults and I’m sharing with everyone the first of mine.
There are inherent risks in investing in P2P financing. To mitigate, I am diversifying as much as I can. Putting in small amounts in every note issued.
And now, as I’ve learnt the hard way, not to overexpose myself to one single issuer.
I hope everyone learns from this.
That being said, I am still getting a 9.23% return. So don’t let yourself be discouraged by my defaults.
If you have not already, you can sign up with Funding Societies hERE.
Alternatively, you may use the code: j1mwa37p
You’ll receive RM50 upon investing your first RM1,000.
Funding Societies has reduced their referral bonus from RM50 to RM30 effective 1st March 2019.
Using my code and link, you’ll still receive RM50.