Posts

Weird ETF I own

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I am investing since more than two decades now and in the constant research for the strategy or product that will make me rich (which does not exists) I bought some out-of-the-ordinary products, some of which I still own. The core of my portfolio are standard stocks and bonds but I dedicated a small part to fringe strategies to educate myself and, to be honest, to keep me interested: after you realise it is very hard to do better than a 60/40 mix, once you can stomach the volatility, financial life tends to get pretty boring.
XTXC
This ETF tracks the performance of the Markit iTraxx Crossover 5-year Total Return Index. The index measures the return for a credit protection seller holding the most current issue of the iTraxx Crossover credit derivative; the performance of the index is generated by three factors: running yield of the CDS (carry), change in CDS prices and the running yield from the funding component (EONIA rate).
XTXC performs like an insurance company: collects premiums …

Fellow Finance

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I started investing in FellowFinance  two years ago and I thought this should be a good time to write a report about my experience so far, even if I still have more questions than answers. So, if anyone of you is also using it, please share with me your experience.
FF is the fifth platform in Europe+UK in terms of monthly new loans origination but despite this fact I do not see a lot of investor talking about it. The main reason I decided to test FF is that it offers exposure to new markets and sectors that I was not capable to invest in with other sites. Business and invoice financing in Finland represent two great diversification opportunities: the risk profile is lower than consumer financing but prospected returns are still high, especially if you compare it with what you can achieve outside the p2p world.  Invoice funding is best described as a short term business loan in which a company receives funding against its trade receivable; the advantage for the company is that it rece…

Bitcoin

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It has been a while since I am studying Bitcoin and crypto; my assumption for this post is that you know the basic stuff and if you do not, go and inform yourself because in a way or another this will have an impact on you in the future. I am very optimistic regarding the technology behind Bitcoin, the blockchain, I am not so sure what to think about Bitcoin and the rest of cryptocurrencies from an investment point of view. The first analogy that came to my mind is with Magic cards. Magic the Gathering is a game I used to play while I was at university; due to two random events, I am old enough and I started to play in the infancy of the game, I had a lot of old cards in my collection. Bitcoin is limited in supply by design, as old Magic cards are in a finite number and cannot be reprinted. Due to the game growth in popularity, old cards became scarce and as per Econ 101, their value grew with their demand. When I stopped playing the game, I sold all the valuable cards (at the time) …

Real Estate

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I am investing in three p2p real estate platform, EstateGuru in EUR and LandlordInvest, Kuflink in GBP; I am also looking for a silver lining in this Brexit joke, a.k.a. to buy an apartment in London now that prices are soft, so I keep more than an eye on the RE market and here are some considerations.
In Switzerland and Denmark you can have a negative rate mortgage; sadly is not (yet) an interest rate only mortgage, where you live in your property AND get paid every month for it...but I think today this scenario is more probable than seeing rates at 6% in Europe. Only time will tell but few years ago I would have called crazy anyone who would have told me negative rate mortgages would be a reality. Fascinating.
Property search websites in UK sometimes display the price history of a house/apartment. Few days ago I found this apartment that is priced 10 times more than its selling price in 1999. 10x in twenty years sounds like a hedge fund guru return, innit? Real Estate investing is …

The Mintos Bond

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Last week I received an email from Mintos saying that IuteCredit, a loan originator on the platform, announced the issuance of a four year senior unsecured corporate bond (ISIN XS2033386603) worth EUR 40 million, with an annual interest rate of 13%. So yes, this is not technically a Mintos bond...but who knows IuteCredit otherwise? This is not the company first bond, I see that in the past they issued EUR and USD bonds but in amounts substantially lower, one and two million.
My thoughts in random order: - I do not have Bloomberg in front of me (so nice to have Anywhere and then leave the token systematically at the office) to check how far in ratings you have to go today to get a 13% yield in EUR but I suspect something quite 'toxic', so this bond has a potential market - for the evolution and acceptance of the industry, this is a step forward: institutional investors have formal mandates and a senior bond is one of the few ways they have to get exposure to this type of credi…

Passive Income

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In my researches about p2p lending and investments in general I stumble sometimes on articles about passive income. But what is passive income? Literally should mean a way to earn an income without making an active effort; this is the first misconception: to find and put in place the conditions to have a future stream of funds, coming from an investment or an entrepreneurial activity, needs a substantial effort of research (or an initial investment in that newsletter/YouTube channel guru -.-), for example, so what seems passive is simply a disconnection between the moment the effort is made and the payback. This is because we are influenced by the dynamics of the most common jobs: you work and at the end of the day/month you receive a salary for the work done. Reading a book about security analysis will not earn you any money at that of the day, but you will use the knowledge acquired to research this stock and that stock, today and tomorrow, so the payback of reading can be distribu…

Linked Finance

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Linked Financeis an Irish P2P platform that started in 2013 and specialises in Euro-denominated business loans, up to EUR 300.000, for small and medium-sized enterprises. So far, the platform originated c2100 loans for EUR 92m, with volumes growing steadily each year. Interest rates are between 6% and 17.5%, depending on loan rating and duration:
Their reported default rate to date is 1.05%, quite low; it is important to know that these p2b platform performance should be judged after a full economic cycle: Linked Finance opened its book right after the last recession in Ireland and their default rate will most likely increase once the next recession hit the country. LF has a nice interface which makes investing easy to understand and quite fun: it’s interesting to read about the projects on offer and decide where to invest; investors can start with as little as €50. I started to invest in 2017 and the sing-up/identity verification was quick and easy…as far as I recall.
I never made a dire…