Am I going to prosper with Prosper.com? (Aug ’15 Update)

It’s been a while since my last post, but checking in with my Prosper account (now having gone through 172 notes), some very interesting observations I’ve made when focusing on notes where borrowers have NEVER had previous delinquencies.

(Would’ve loved to make an infographic for this, if not due to lack of time!)

Out of the collection of 172 notes, so far:

=== The stats ===

Seasoned Only return: 7.58%
All Notes: 7.46%

Defaults / Charge offs:
(1) Default, grade A
(6) Charge-offs
– (1) Grade AA
– (3) Grade A
– (2) Grade B

Lates:
(1) <15 days late, grade A
(1) 15-30 days late, grade AA

Paid off / On Time / As per Terms:
(14) Grade AA
(14) Grade A
(6) Grade B
(3) Grade C
(1) Grade D

Current:
(30) Grade AA
(47) Grade A
(31) Grade B
(9) Grade C
(7) Grade D

=== Observations ===

1. Proportionally speaking, since most of the portfolio is Grade A, it make sense that there are more Grade A charge-offs and lates.

2. What’s interesting is that the % of lates / defaults for Grade B/C/D isn’t higher (at least not yet, as most “C” and “D” notes are about 9.7 months old.)

3. If trends hold, my hypothesis of selecting only notes with borrowers that have no previous delinquencies may be the filter needed to be used to target higher returns by focusing on grade B/C/D notes – while minimizing risk.


This topic will be revisited in another 3 months, around November, when more of our C & D graded notes would be about a year old!

One thought on “Am I going to prosper with Prosper.com? (Aug ’15 Update)”

  1. According to the Investment Criteria provided by Prosper (or Lending club), it looks like the combination with certain percentage of high risk notes (C-HR) can actually generate more profit. However, the resource may be reconsidered/ reevaluated.
    Thank you for your observations and sharing! I will try to generate some data too to follow up.

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