Strategy for Mintos by the end of 2019

Recently there are several news about defaulted loan originators in Mintos. This has happened in the past and more importantly will happen in the future. We as investors need to keep ourselves updated and minimize risks. Some say – change platform – I believe in picking more conservative auto invest strategy in this case.

I keep myself up to date by following Mintos news in their blog & comments. I can also recommend an article from Explorer P2P on loan originator defaults.

Why Mintos is in negative spotlight?

Mintos negative spotlight

Other platforms like Fast Invest and Twino do not get so much negativity because they are more secretive about their loan originators. Seeing the situation from this angle Mintos can say we are as transparent as we can be.

After all we, as investors, have the chance to not use the Invest & Access function and hand pick loan originators. However, there is always space for improvement.

Mintos could be more open about all cases like this in the future. Publishing more information, e.g., setting up clear processes for loan originator default and making them public for investors. When this is in place, in case of loan originator default, report status on which process stage they are.

This brings me back to topic about why Mintos was not approved to do their business in UK in 2018. Find out more by reading this article and full report of Financial Conduct Authority (FCA). In short – lack of preparation and not taking procedural requirements seriously enough.

It is not easy to be the biggest one – setting up example for followers.

Mintos showing example

My personal portfolio situation

Have I lost money while investing in Mintos? I think I will – once the Aforti default is official. Currently, I have outstanding 4.36 EUR invested in Aforti. You can call me pessimist or challenge me in my statement but I strongly believe that this money is lost.

After changes I did earlier this year on diversification, my portfolio is more evenly diversified with highest loan originator having below 30% of allocation.

Mintos strategy allocation
Biggest allocation is for Kredit Pintar (27.8%), next one to IuteCredit (25.4%)

What strategy I use and why?

Step 1

You can login into your Mintos account and open the link below.

https://www.mintos.com/en/invest-en/primary-market/?min_interest=9&max_term=12&currencies[]=978&lender_groups[]=43&lender_groups[]=8&lender_groups[]=7&lender_groups[]=4&lender_groups[]=42&lender_groups[]=11&lender_groups[]=58&lender_groups[]=77&lender_groups[]=23&lender_groups[]=25&lender_groups[]=72&lender_groups[]=53&lender_groups[]=2&lender_groups[]=52&lender_groups[]=41&lender_groups[]=28&with_buyback=1&sort_field=interest&sort_order=DESC&max_results=100

Then click on Create Auto Invest portfolio button.

Create Mintos strategy

For reference, here are sub-steps by which you can end up with the same filter:

  • Choose EUR loans to avoid currency exposure risk
  • Hand pick top 16 loan originators from the Explore P2P loan originator ratings page
  • Choose buyback guarantee (even though it has proven to be 100% reliable)
  • Select highest yielding loans with minimum interest of 9%
  • Shorter term loans which mature within 12 month period
Step 2

You should end up in the screen of Create new Auto Invest strategy.

  • Filter only B+ and above loan originators (to minimize risk with information from Mintos side)
Choose Mintos loan originator ratings
Pick ID Finance only for KHZ

Below you can see the number of loans available and the diversification at the time of writing (22.11.2019) for this strategy.

Number of loans
Loan distribution

See image below of what your loan originator table would look like.

Mintos strategy overview
Step 3 (optional)

This step is optional because it could potentially give more income when loan is bought back, however, you lose some of the diversification.

Filter by loan originators which pay interest on delayed payments (loan originator details). Essentially deselecting Acema and Mogo.

Mintos loan originators sorted by payments on delay
Loan count

Loan distribution

This is something you would end up with if using the optional third step.

Mintos strategy overview
Step 4
  • Give the strategy some meaningful name (e.g. “Top 16 P2PExp – B+ – 9%+ – 0-12m”).
  • Set portfolio size accordingly. I usually set it higher than my portfolio volume.
  • Depending on your total portfolio volume you can set the Investment in One Loan. I usually set it 10 to 50 EUR.
  • Make sure Yes is selected for the diversify option for your new strategy.
Step 5 (optional)

To maximize returns, you can create new strategies by repeating steps 1 to 4 with changing the interest to say 10%, 11%. Set the highest interest strategies on top of the priority list. By doing this you ensure to capture highest yields always while keeping lower risk profile.

Conclusion on strategy for Mintos

Strategy adjustment is a routine task which usually takes some time. Especially with the current performance of the Mintos site. However, once you get this over with, you can significantly lower the risk of ending up with loans from Aforti and alike.

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