With its customisable settings, Proplend’s Auto-Lend facility can be tailored to a range of personal investment preferences. Allocating to our safest 0-50% LTV (Tranche A) loan parts, it targets a minimum return of 5% p.a. after fees.*
*Target rate p.a. once invested, after fees, before bad debt and tax.
Since launching 5 years ago, Proplend has been a manual invest platform, priding itself on high standards of underwriting and sharing comprehensive due diligence with Lenders to help them make informed investment decisions.
Whilst self-select remains the standard method for investing (and the only way to invest to all three of our risk-adjusted Tranches), the demand for a lower involvement investing alternative became increasingly apparent as our Lender population grew and diversified – particularly with the introduction of Innovative Finance ISAs.
In the space of 12 months, Auto-Lend has evolved into a highly credible and utilised ‘2nd way’ to invest in the platform’s commercial property-backed loans. Below we look at the variety of ways our Lenders, including some of our the more ‘hands-on’ amongst us have enabled the facility to enhance their Proplend experience.
1. Truly passive loan investing
A number of new Lenders, particularly those who are new to peer-to-peer lending too, have chosen to use Auto-Lend to invest and diversify their funds from outset. There’s no need to customise your settings if you don’t have strong investment preferences or you prefer to see how things work initially.
‘Auto’ settings put an emphasis on getting funds invested quickly, albeit with the first £5,000 for new accounts diversified to 5 different loans and a 20% of overall account value maximum per loan thereafter. Lenders can change this to a monetary maximum per loan at any time.
And having gained confidence through their personal experience, in addition to the platform’s reputation for security and due diligence, more existing Lenders are enabling the facility’s ‘auto’ settings too. Happy with the inflation-doubling target return on this hassle-free basis.
2. Maximising diversification
Despite our no investor losses to date, diversification of holdings across loans and platforms and asset types is generally considered best practice. Many Auto-Lenders are specifying a maximum investment per loan of £1,000 (our minimum), while others are specifying higher maximums in line with the larger amounts they’re looking to invest.
An existing Lender recently fed back to us how pleased he was with the changes and that he can now use the system because it allows him to set an individual loan limit of £2,000 (rather than having up to 20% allocated of what is a sizeable account value). Customisation has allowed him to auto-allocate his available cash to more loans.
3. Best chance of getting into every new loan
All Proplend loans have a 0-50% LTV Tranche A and Auto-Lend gives you priority for new primary market loans with access in advance of manual investors. We set caps per investor for smaller and more popular (usually higher rate) loans but even then, demand can outstrip supply.
Enabling the facility for the primary market (or both markets) gives Lenders their best chance of participating in new loans with our token-based system allocating loan parts in turn, one for each eligible Lender before allocating a second to any account.
4. Best chance of getting into specific loans
Whether there’s no Tranche B or C (for loans with an overall loan LTV of up to 50%), or they just don’t want to leave it to chance that there will be some of the loan remaining after Auto-Lend has run, Lenders who prefer to manually select can confidently use the facility to.
Lenders can set the maximum amount they want to invest to Tranche A, turn on the facility and conveniently let Auto-Lend take their place in the queue – rather than having to make themselves available promptly at midday to vie for any remaining loan parts.
5. ‘Toggling’ the facility for the best of both worlds
Having enabled Auto-Lend to help ensure at least a part of a specific loan, some Proplenders are turning the facility off just before the midday manual invest ‘In Funding’ time so they also get a shot at Tranche B and Tranche C.
Lender availability and timing are essential for this approach, but the reward can be a blended holding for a single loan that they’re more comfortable with. It could be for example, that the Tranche A return is lower than they’d prefer or that Tranche B or C by themselves feel a little too risky for their tastes.
6. Diversifying into active loans that they’re not currently in
Whether a long-standing patron or new platform user, Proplenders may prefer to focus on previously funded loans that they missed out on first time around. Enabling Auto-Lend for our secondary (PLE) market means available cash will only be allocated to already interest-bearing loans.
Auto-Lend takes existing holdings into account before allocating current (and future) available cash. Setting a £1,000 maximum investment per loan for example, will see them automatically invested to an active loan they’re not already holding if it’s available when the facility runs.
Already funded loans tend to become available (if at all) in smaller quantities, so you’re unlikely to invest funds quickly adopting this approach. Manual investors don’t have to wait until Auto-Lend runs from 3pm, so can snap up PLE loan parts if they spot them first.
7. Making all loans Auto-Lend eligible
While customising some settings like markets and monetary maximums can slow the allocation of available funds, extending the maximum loan term setting can speed up the allocation by making longer maturity dated loans Auto-Lend eligible where they wouldn’t automatically be.
A recently funded loan couldn’t be invested into using the Auto-Lend due to its 4-year term. However, feedback from Lenders suggested they would like to have been given the choice of including it within their auto-investment. So we made the change for future loans.
8. Using Auto-Lend to do their Auto-bidding
Lenders with strong views on loan and property types, can now invest different amounts to different loans using the facility. They can tweak the maximum investment per loan and toggle Auto-Lend on and off to achieve similar outcomes to those they would have hoped for if they’d invested manually.
Provided they’re happy with Tranche A, they can improve their chances of participation by using Auto-Lend to invest on their behalf – and they don’t have to make themselves available or get caught in the rush. If they’re happy to manage the settings on a loan by loan basis, Auto-Lend will do its best to fulfil fresh instructions each time (subject to availability).
Related to this post ….
Blog: June 2019 upgrades to Auto-Lend
More about Proplend’s (Tranche A) Auto-Lending investment options
Blog: “Astoundingly attractive for the risks involved” – Proplend’s Tranche A loan investments retain their top 4thWay rating
