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Lending Club Discussion => Investors - LC => Topic started by: Rob L on January 06, 2018, 04:53:02 PM

Title: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 06, 2018, 04:53:02 PM
When I posted these tables last quarter I trampled on another thread so I figured it would be best to start a new thread on the topic.
The tables are another way to look at the Cumulative ROI numbers provided in graph form by Insikt's excellent web site.
I think the data speaks for itself.
It may be that 16Q2 was the worst vintage, but I've not seen anything to indicate a major turnaround for lenders is underway.

(https://i.imgur.com/0vsXFT4.png)

(https://i.imgur.com/wLmXYQx.png)

(https://i.imgur.com/aXE3S7K.png)

(https://i.imgur.com/QmbubhU.png)

Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: MarinBB on January 06, 2018, 07:24:35 PM
When I posted these tables last quarter I trampled on another thread so I figured it would be best to start a new thread on the topic.
The tables are another way to look at the Cumulative ROI numbers provided in graph form by Insikt's excellent web site.
I think the data speaks for itself.
These are beautiful, thanks for doing this. Do you have a summary tab for all LC loans that is not sliced by Grade?
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: sensij on January 07, 2018, 02:13:22 AM
These are beautiful, thanks for doing this. Do you have a summary tab for all LC loans that is not sliced by Grade?

I think this covers your request (36 mo loans only, all grades)

(https://forum.lendacademy.com/index.php?action=dlattach;topic=4785.0;attach=1768)

Also, for those interested, here is Insikt's definition for this metric:

Quote
For any given period, this return metric equals the monthly interest and borrower late fees you have received on your loan investment, net of servicing fees and principal losses (all annualized) divided by the average loan balance outstanding during that period.

Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 07, 2018, 09:34:37 AM
These are beautiful, thanks for doing this. Do you have a summary tab for all LC loans that is not sliced by Grade?

I think this covers your request (36 mo loans only, all grades)


Very nice addition, thanks!
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 07, 2018, 10:53:01 AM
Thought it would be interesting to compare the cumulative ROI of C, D and E grade loans to B grade loans. In the tables below the ROI of B grade loans is subtracted from C, D and E grade loans respectively. Since C, D and E are riskier by definition their ROI should include a risk premium to compensate the lender for owning them. As shown below this has been far from the case. Even C grade loans have little or no risk premium. Best case there has been very little or no risk premium but for the majority of vintages there are very substantial risk discounts! Of course this isn't new news, but it's interesting to see the magnitude. To me it's a persuasive argument to only invest in B loans if one invests at all (or maybe A grade as I haven't looked at them).

(https://i.imgur.com/lFnoo74.png)
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: SLCPaladin on January 07, 2018, 11:03:54 AM
This is excellent insight Rob. If I read these tables correctly, would I be correct in assuming that loans that were originated in Q3 of 2017 would be "expected" to perform similar loans originated in Q4 of 2014? I know major economic shocks and external events would change the trajectory and of course nothing is guaranteed, but it seems like if early indications of the trajectory look like the loan quality has improved relative to what was originated during 2015 and 2016. Is that a fair conclusion?

I am specifically thinking about reinvesting in B grade notes of 36 month duration. I have run down about $120k to about $40k now.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 07, 2018, 12:36:02 PM
This is excellent insight Rob. If I read these tables correctly, would I be correct in assuming that loans that were originated in Q3 of 2017 would be "expected" to perform similar loans originated in Q4 of 2014? I know major economic shocks and external events would change the trajectory and of course nothing is guaranteed, but it seems like if early indications of the trajectory look like the loan quality has improved relative to what was originated during 2015 and 2016. Is that a fair conclusion?

I am specifically thinking about reinvesting in B grade notes of 36 month duration. I have run down about $120k to about $40k now.

If I had to make a WAG I'd guess we never get back to 14Q4, but land somewhere between 15Q1 and 15Q4 (say 5.8% to 4.8% ROI on B grade loans). LC has competition now. Back in 14Q4 it was either LC or Prosper. Times are so different and banks are lending again. Someday most banks will probably have their own version of Marcus. It appears clear LC lowered standards way too far in the 16Q1 - 16Q4 vintages, so they probably have since needed to swing the pendulum back to keep and attract lenders. Of course they can only do this if competition permits. And yeah if major shocks come along we don't know how bad it could get. This analysis and a buck won't get you a coffee so take it for what it's worth.

edit
Thought I'd add one more comment. Lately I've been looking at the A,B and C loans being offered at feeding times and IMO there are some really really lousy ones in all the grades. You've seen some mentioned in the "Worst Loan of the Day" thread https://forum.lendacademy.com/index.php/topic,4767.0.html (https://forum.lendacademy.com/index.php/topic,4767.0.html). That said, I think now, more than ever, loan selection by retail lenders (either by 3rd parties or do-it-yourself) can be of substantial benefit. Being extremely picky will pay off. Again I must say this is my unproven speculation at best, so FWIW ...
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 07, 2018, 03:21:19 PM
Best case there has been very little or no risk premium but for the majority of vintages there are very substantial risk discounts! Of course this isn't new news, but it's interesting to see the magnitude. To me it's a persuasive argument to only invest in B loans if one invests at all (or maybe A grade as I haven't looked at them).


Thanks for the great analysis.  Makes me very happy.

But I disagree with the above conclusion.  You've included 4 years below, two or so of which contains a low point in a cycle.  If you think consumer cycle's occur over 4 years in a similar fashion, then yes I think the above statement is correct.  But without expliciting addressing this assumption, I don't think you can conclude that B is the best bet.  If we took the same analysis for E grade loans several years ago when this forum was complaining there wasn't enough high interest rate notes available (oh my how things have changed!), then it would have looked stupid to ever invest in B grade notes (I'm guessing).  You have to judge profitability of loans "through a cycle."  But you have the beginning blocks to do such an analysis.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 07, 2018, 03:23:12 PM
Best case there has been very little or no risk premium but for the majority of vintages there are very substantial risk discounts! Of course this isn't new news, but it's interesting to see the magnitude. To me it's a persuasive argument to only invest in B loans if one invests at all (or maybe A grade as I haven't looked at them).


Thanks for the great analysis.  Makes me very happy.

But I disagree with the above conclusion.  You've included 4 years below, two or so of which contains a low point in a cycle.  If you think consumer cycle's occur over 4 years in a similar fashion, then yes I think the above statement is correct.  But without expliciting addressing this assumption, I don't think you can conclude that B is the best bet.  If we took the same analysis for E grade loans several years ago when this forum was complaining there wasn't enough high interest rate notes available (oh my how things have changed!), then it would have looked stupid to ever invest in B grade notes (I'm guessing).  You have to judge profitability of loans "through a cycle."  This means including the full range of a cycle, not just sections of it.  But you have the beginning blocks to do such an analysis.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 07, 2018, 05:03:36 PM
Best case there has been very little or no risk premium but for the majority of vintages there are very substantial risk discounts! Of course this isn't new news, but it's interesting to see the magnitude. To me it's a persuasive argument to only invest in B loans if one invests at all (or maybe A grade as I haven't looked at them).


Thanks for the great analysis.  Makes me very happy.

But I disagree with the above conclusion.  You've included 4 years below, two or so of which contains a low point in a cycle.  If you think consumer cycle's occur over 4 years in a similar fashion, then yes I think the above statement is correct.  But without expliciting addressing this assumption, I don't think you can conclude that B is the best bet.  If we took the same analysis for E grade loans several years ago when this forum was complaining there wasn't enough high interest rate notes available (oh my how things have changed!), then it would have looked stupid to ever invest in B grade notes (I'm guessing).  You have to judge profitability of loans "through a cycle."  But you have the beginning blocks to do such an analysis.

I appreciate the complement and agree with your loan cycle criticism. It makes a very important point. Look at what's been going on with ROI in the various LC grades over just over the past four years. Huge drops. No way has the loan cycle (i.e. consumer repayment behavior) been the dominant factor. I would even argue (speculatively) that the loan cycle has played a rather minor role. Instead my theory FWIW is that LC's management of its underwriting criteria has had a much larger impact over this period. They have a balancing act to perform between offering lower interest rates (to maximize originations and their profits) versus higher interest rates (to keep and attract investors). Not only did LC overtly lower interest rates 14Q1 through 16Q1 but I suspect it simultaneously changed its lending criteria to offer even lower rates to more risky borrowers. They made a judgement that the borrower / lender balance was skewed too far towards the lender. As you said, lenders were knocking down their doors to give them money. It takes quite a bit of time (maybe a year) for the impact of these changes on ROI to become apparent (to lenders and probably LC itself). Sometime around 16Q2 LC not only had its scandal but realized it had taken things way too far in the borrower / lender balance. It may be that by that time the lending cycle contributed to this imbalance as well. Since then LC has increased interest rates a bit but we don't have enough data to know what if any changes they have made to tighten their underwriting. To further complicate life for them they now have serious competition and there will be more rather than less of that in the future.

Somewhere in the past I wrote that LC would always have borrowers but not necessarily lenders. The year or more time lag between lending and results requires lenders to bestow a certain degree of confidence in the underwriting of their intermediary. I don't have that any more. However if LC continues to provide transparent data it seems to me that, in theory, lenders may be able to cherry pick loans that meet their own criteria (if any) and have only themselves to blame if it doesn't work out.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Fred93 on January 07, 2018, 05:39:08 PM
This is excellent insight Rob. If I read these tables correctly, would I be correct in assuming that loans that were originated in Q3 of 2017 would be "expected" to perform similar loans originated in Q4 of 2014?

Depends on how you develop your expectations.  Every vintage does not have the same shape vs time.  You're extrapolating from a very early point in the curve.  Just a few months of behavior. 

So, the answer is "maybe".
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Lovinglifestyle on January 07, 2018, 07:31:20 PM
My confidence in LC's underwriting hit a new bottom when all the loans started to come out as "approved", but didn't look any better to me.  Seems like all they had to do to get approved was fill out an application and have sufficient FICO.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: SLCPaladin on January 07, 2018, 10:43:24 PM
I was playing around with the charts on Insikt to see the different vintage curves. I agree with your point Fred, it does seem way too early to draw any meaningful conclusions about the shape of the charge offs for these early vintages. I'm comparing cumulative ROI curves of various vintages and net charge offs. The two correlate, but not exactly. As best I can tell, the reason these most recent ROI curves look better is because the rates are better, not because there are fewer charge offs. What I suppose we don't know is whether the rate increases that happened post scandal will offset the higher delinquencies.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Lovinglifestyle on January 08, 2018, 11:34:57 AM
These are beautiful, thanks for doing this. Do you have a summary tab for all LC loans that is not sliced by Grade?

I think this covers your request (36 mo loans only, all grades)

(https://forum.lendacademy.com/index.php?action=dlattach;topic=4785.0;attach=1768)

Also, for those interested, here is Insikt's definition for this metric:

Quote
For any given period, this return metric equals the monthly interest and borrower late fees you have received on your loan investment, net of servicing fees and principal losses (all annualized) divided by the average loan balance outstanding during that period.

I need a little help understanding what I think I'm seeing.  Does the bolded quote apply to this chart?  If so, the chart makes investing in LC look great to me.  There are no minuses at the bottom.  So the outcome of all grades combined is positive, regardless of individual risk?
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: arcee49 on January 08, 2018, 01:37:37 PM
My confidence in LC's underwriting hit a new bottom when all the loans started to come out as "approved", but didn't look any better to me.  Seems like all they had to do to get approved was fill out an application and have sufficient FICO.

IIRC the reason all loans started coming out as "Approved" was a change LC made to keep people from investing in a loan that later got rejected and thereby not tying up investor's money in a loan that would never be issued.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 08, 2018, 07:34:15 PM
I don't think we can ignore that low grade LC notes performed poorly at the same time low FICO consumer loans were performing badly at lenders at large.  While LC's desire for growth and loosening standards didn't help, these are actual typical of cycles.  Lending standards relax as competition heats up and then losses cause them to tighten, so management's decisions is correlated with the cycle.  Some managers avoid falling for this trap, but they sacrifice growth. 
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Fred93 on January 08, 2018, 07:55:15 PM
I don't think we can ignore that low grade LC notes performed poorly at the same time low FICO consumer loans were performing badly at lenders at large.  While LC's desire for growth and loosening standards didn't help, these are actual typical of cycles.

I think you imagined that "cycle".  2014-2015-2016 looks pretty damn flat to me.  In fact, the fed data shows 2015 to be a little better.  Its at the trough of the chargeoff curve.  The 2015 loans from Lendingclub were the stinko loans. 

So I'm not so quick to accept excuses.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Ffed-fred-consumer-chargeoff-2017-01.PNG&hash=2f5cecf8d42ac84edcdccac27d30f03a)
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: nonattender on January 08, 2018, 08:54:05 PM
I don't think we can ignore that low grade LC notes performed poorly at the same time low FICO consumer loans were performing badly at lenders at large.  While LC's desire for growth and loosening standards didn't help, these are actual typical of cycles.  Lending standards relax as competition heats up and then losses cause them to tighten, so management's decisions is correlated with the cycle.  Some managers avoid falling for this trap, but they sacrifice growth.

Meta, it sounds like you may've gotten a job with a bunch of banker/suits.  You seemed sharper before.  They may be dragging you down.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 09, 2018, 03:52:50 AM
I don't think we can ignore that low grade LC notes performed poorly at the same time low FICO consumer loans were performing badly at lenders at large.  While LC's desire for growth and loosening standards didn't help, these are actual typical of cycles.

I think you imagined that "cycle".  2014-2015-2016 looks pretty damn flat to me.  In fact, the fed data shows 2015 to be a little better.  Its at the trough of the chargeoff curve.  The 2015 loans from Lendingclub were the stinko loans. 

So I'm not so quick to accept excuses.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2Ffed-fred-consumer-chargeoff-2017-01.PNG&hash=2f5cecf8d42ac84edcdccac27d30f03a)
I don't know how many times you're going to cite the Fred statistics. I think I've argued with that data source enough, but it never seems to stick. If you want to think every market observer imagined the rise in credit costs across the Subprime space, then that's fine.
 
For others who don't have the history of my critiques, this is what my first google result said :

NEW YORK, March 14 2016 (Fitch) Delinquencies on U.S. subprime auto ABS have eclipsed 2009 recessionary levels and are now at a level not seen in nearly two decades, according to Fitch Ratings. Subprime delinquencies of 60 days or more hit 5.16% for February reporting, marking the highest level observed since October 1996 (5.96%).

@nonattender I'm sorry I won't join the LC bashing club. I know it's popular on this forum, for whatever reason, to act like LC is the sole source of evil. I just suspect it's because most people's exposure to credit markets is just these peer lending products. I never said that they are blameless or that I agreed with what they did. And I don't understand how explaining how credit standards change is somehow banking propaganda. But whatever, this is enough for now lol
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: hessinger on January 09, 2018, 04:46:46 AM
Instead my theory FWIW is that LC's management of its underwriting criteria has had a much larger impact over this period

I would be curious to see this same style of the graph created on Prosper data to compare not that that is a definite baseline. Anecdotally, I have several LC and Prosper accounts that were running in parallel over the past few years, and while I've seen a slight drop in performance on my prosper accounts, they haven't seen anywhere near the drop I see on my LC accounts. It was certainly around 2016 when I started to see a pretty large divergence in performance.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Fred93 on January 09, 2018, 05:42:33 AM
If you want to think every market observer imagined the rise in credit costs across the Subprime space, then that's fine.
...
NEW YORK, March 14 2016 (Fitch) Delinquencies on U.S. subprime auto ABS have eclipsed 2009 recessionary levels and are now at a level not seen in nearly two decades, according to Fitch Ratings. Subprime delinquencies of 60 days or more hit 5.16% for February reporting, marking the highest level observed since October 1996 (5.96%).

The world is complex, and you can look at data sliced up may different ways.  There are many different statistics out there for many different slices and subgroups.  You're quoting "subprime" statistics, and in particular "subprime auto".  There is no question that subprime auto went to heck in 2015/6/7.  I don't deny it.  Its just that we weren't supposed to be in that category.

LC loans aren't supposed to be "subprime", and they aren't "auto" loans.  Different people have different definitions of "subprime".  Bloomberg in the chart below uses "credit score < 620" to represent "subprime".  But LC loans are all credit score >=660.

(https://forum.lendacademy.com/proxy.php?request=http%3A%2F%2Ffred93.com%2Ffbi%2FSubprime-delinquency-2017.png&hash=371329e6c6c5712873355ab6e083ff8e)

It is interesting to see in that chart that the subprime auto loans didn't perform like the subprime bank and credit union loans during 2016/7.  I think the reason for this is that during this period auto inventory levels were rising and the auto industry lowered their credit standards.  I can't prove it, but that explanation seems to fit the data.

Similarly, I believe LC and Prosper lowered their standards in the 2015/6 era.  LC "C" and "D" loans weren't supposed to behave like "subprime auto", but in those vintages, they did.

I do blame LC for lowering their credit standards during this time, and being entirely opaque about the fact that they were doing it.  Frankly I think it was a near-death experience for them.  If they had done just a little worse, they'd be out of business now.

To be clear, even the bank subprime loans (blue curve) did fine during this period. 

Having gone thru this period, I now have a deeper appreciation for the fact that the LC credit grades "A B C D E F G" are more plastic than I had imagined.  Just because "D" loans performed a certain way in the past, in various economic conditions, doesn't mean that the new "D" loans (which may be written to completely different credit standards) will bear any relationship to historical "D", etc.  Because of my conservatism I didn't bear the brunt of this.  My returns stayed positive, just came in a lot lower than I expected.  And... gave me quite a worry as they were falling, because I didn't know how far they would fall.  For me, and for many other LC investors, this caused a substantial loss of confidence in the LC team, 'cause we don't know when they will do it again.

I do believe they're recovering from the underwriting screwup of 2015/6.  I think the charts posted by Rob L at the beginning of this thread show that.  Its too soon to be sure, but it looks like at least a modest recovery.  The other way to observe this is to look at my own returns.  They've stopped going down.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 09, 2018, 10:54:54 AM
I think I better understand your point now. This  whole thread is how low grade LendingClub notes didn't perform well. Do you want to compare these notes to prime borrowers instead? Just because they are a few points above 660 doesn't mean they aren't impacted by the same variables. I disagree they shouldn't be subprime. They are low FICO borrowers paying credit card level rates on installment debt, many  at levels above the usury rate of their state. Maybe LC investors didn't appreciate this level of risk, but it's not like we haven't discussed it ad nauseum on the forum leading up to 2016.

Your auto explanation on the differences is likely correct. And yes, banks lend differently than non banks. Do you expect LendingClub to be similar to a bank? I do not.

And yes, I agree that I don't think many people understand of credit standards are not fixed. It is a very important part of the credit dynamic.  That's why I think it's probably best to backtesting certain characteristics and not certain grades, since grade is a made up thing that changes whenever they want it to.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 09, 2018, 11:23:16 AM
This  whole thread is how low grade LendingClub notes didn't perform well.

Personally I already knew (all too well) they have performed poorly.
I'm interested in looking to the future to see if things are getting better, and by how much. It will take time.

Also, I was surprised that, even in the higher grades, there was no risk premium to be found in riskier loans (say C vs B).
That's puzzling.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 09, 2018, 12:18:59 PM
This  whole thread is how low grade LendingClub notes didn't perform well.

Personally I already knew (all too well) they have performed poorly.
I'm interested in looking to the future to see if things are getting better, and by how much. It will take time.

Also, I was surprised that, even in the higher grades, there was no risk premium to be found in riskier loans (say C vs B).
That's puzzling.
Yeah I know, just trying to explain that LC wasn't the only one having weakness. What do you mean by risk premium? If it's the difference in earnings, this tends to disappear in times of stress. I've been replying on my phone so not the easiest to look at the graphs to see what you are referring to
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 09, 2018, 03:59:51 PM
This  whole thread is how low grade LendingClub notes didn't perform well.

Personally I already knew (all too well) they have performed poorly.
I'm interested in looking to the future to see if things are getting better, and by how much. It will take time.

Also, I was surprised that, even in the higher grades, there was no risk premium to be found in riskier loans (say C vs B).
That's puzzling.
Yeah I know, just trying to explain that LC wasn't the only one having weakness. What do you mean by risk premium? If it's the difference in earnings, this tends to disappear in times of stress. I've been replying on my phone so not the easiest to look at the graphs to see what you are referring to

My definition of risk premium is that a basket of riskier loans (loans with more returns variance mathematically) should pay the lender a higher rate of return than a less risky basket of loans. Otherwise nobody would (or should) own the more risky basket. Why you may ask? Because the spread of loan returns within a fixed confidence interval (say 95%) for any single basket widens as risk (returns variance) increases (assuming the number of loans in the basket is constant). Diversification can take you only so far. One must own a lot more loans in a risky basket (say E grade) to achieve the mean return of all E grade loans +/- 1.5% with 95% confidence than A grade loans. The lender must be compensated for the fact he/she may simply be unlucky; it's unavoidable.

Take a look at this old thread for more:
https://forum.lendacademy.com/index.php/topic,2637.msg23080.html#msg23080 (https://forum.lendacademy.com/index.php/topic,2637.msg23080.html#msg23080)
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: rawraw on January 09, 2018, 04:31:01 PM
Makes sense. I don't think there is much benefit to buying low grade notes, which is why I've historically held ~60% of my portfolio in ABC.  I never quantified it, I just noticed the very small difference in returns from people on this forum and myself despite my weighted average interest rate often being much lower. 
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on January 12, 2018, 05:42:17 PM
Instead my theory FWIW is that LC's management of its underwriting criteria has had a much larger impact over this period

I would be curious to see this same style of the graph created on Prosper data to compare not that that is a definite baseline. Anecdotally, I have several LC and Prosper accounts that were running in parallel over the past few years, and while I've seen a slight drop in performance on my prosper accounts, they haven't seen anywhere near the drop I see on my LC accounts. It was certainly around 2016 when I started to see a pretty large divergence in performance.

Unfortunately the Inskit data for Prosper doesn't go out as far as we'd like. The comparison is very rough.
Anyway, here's a few comparisons FWIW:

(https://i.imgur.com/Nd9BwEq.png)

(https://i.imgur.com/C0LBXxO.png)

(https://i.imgur.com/Vs0ViKt.png)

It appears that LC investment in less risky loans outperformed Prosper but investments in Prosper more risky loans outperformed LC.
That leads me to believe @hessinger was invested in more risky loans and Prosper held up much better.
I got it backwards, investing in LC D & E Grades while investing in Prosper A & B Grades.
Now I invest on no Grades.



Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Rob L on February 03, 2018, 11:37:02 AM
This morning I took a look at the Insikt site to attempt to get a more timely measurement of recent loan performance by vintage. So, rather than Cumulative ROI, I looked at 30+ day delinquency rate as a percentage of outstanding balance, C grade, 36 month loans only. Data as of 12/31/2017 (very recent).

See: https://www.insikt.com/#/invest/mycro/vintage/delinquency30d?po=Partner&or=LendingClub&fr=Quarterly&tY=2017&tM=10&fY=2016&fM=4&fi=creditRating&sGO=C&lt=36 (https://www.insikt.com/#/invest/mycro/vintage/delinquency30d?po=Partner&or=LendingClub&fr=Quarterly&tY=2017&tM=10&fY=2016&fM=4&fi=creditRating&sGO=C&lt=36)

Unfortunately, the news is not good. Don't shoot the messenger (again).

Vintage     3 MOB      6 MOB
------        -------       -------
16Q2         0.64%      1.84%
16Q3         0.64%      1.93%
16Q4         0.51%      1.51%
17Q1         0.39%      1.50%
17Q2         0.51%      2.29%
17Q3         0.73%      n/a

At 6 months on books (MOB) 17Q2 has the all time highest 30+ day delinquency rate percentage on record. The same may be said for 17Q3 at 3 MOB.
Guess it's too early to draw any long term conclusions from this, but these last two vintages are going in the wrong direction.

Meanwhile, interest rates seem to be heading up at the moment; everywhere but LC that is.
Title: Re: Cumulative ROI by Vintage Beginning 14Q1
Post by: Fred93 on February 03, 2018, 12:27:24 PM
I often see that 30 day delinquency and 60 day delinquency both show me what looks like a trend, but going in opposite directions!  Extrapolation from either of these in the early months is just very noisy.