Optimisation of Investment (Part 2)

In Part 1 I covered how important is to manage expense and track them religiously ( Managing Expense )

In Part 2  I am covering

  • Investment Allocation
  • Liquidity Management

Investment Allocation :  Somebody tells you about some great investment product. What do you do? You put some money into it .Does this change the outcome of your future corpus. The answer is no! Unless you allocate a substantial amount of money in a a particular product it would not have much   bearing on the result. If you put too much money in it you run a huge risk of losing the capital. After all Risk and Reward are Related.

It sounds like a cliche but for any investment we can only choose 2 out of 3

  • Quick
  • Easy
  • Sure

Either you can choose it to be sure and easy  but  it  wont be quick or  it can be Quick and Sure  but it wont be easy

So a balanced approach is important. This bring me to the point  why ” an average investor does not need a wealth manager who charges annual fees” because the loss in fees over a 10 year period is substantially higher than any valuable advise he can provide which is not already available in the public domain.

Now I will show how my excel tool helps in asset allocation:

In our example Mr X had 100,000 monthly cash inflow. His expense was 69000 and 31000 was the saving. Now as the individual is young he wants to go for slightly aggressive portfolio  with a 10 year horizon.


In the “Accumulated Investment” column I have  added all the existing investment of  Mr X. In the “Monthly Investment” column I have added the amount he would put monthly. In the last row we can see anything left would be put in the saving account ,which should be minimum unless its a strategy.

Points to note in the investment allocation are

  • I have not used any names of Mutual funds. The idea is that the individual will invest in 1-3 funds in each category as he does not want to take too much risk on one particular fund.
  • This tool can project corpus for any tenor,Also your ROI for that tenor and allocation percentage
  •  I have added expected return column where the investor can put  how much he can expect to gain per annum on that category. Always use a conservative figure to have cushion for unexpected times.
  • I have used p2P funding as an asset class which gives me good diversification and returns at par with equity. It is an add on  and not a replacement.
  • I do not have any Large Cap exposure .Why?

Here is the Trick.! Lets say I wanted to  have 7 Lakh exposure to Nifty 50 . What I did is I bought  5 lakh worth of Credit funds and 2 lakh nifty liquid bees ETF.

So lets say my investment in Large Cap would have fetched on an average 11%  annually.

Now My 5  lakh will fetch around 9% , 2 lakh  7 % .ie.  around 8.5 % on this portfolio.

I can use the Liquid bees to get margin. I will Sell 1 year tenor   2 Deep OTM  (10% OTM) put on Nifty . I will get around 5% for this. Now if Nifty is at 11000. I will sell 2 puts at 10000.

If market tanks 10 percent I am still safe  and get around 8.4% +5% = 13.4% return. Compared to this my large Cap would have been 10% down now. In most scenario this will be better except say a 25% drop or lower  in Nifty.If I am scared of that I can sell further OTM at 3% yield instead  which will be better off even at 30% Nifty Fall.

  • The portfolio IRR is around 11% . what will happen if I had bought a different fund which gave  more return  than my existing small cap and midcap  fund. So where I had  put conservative figure of 6 and 8% now I have put 12%.

Whats the impact ? only 0 .7% on the total portfolio . This is much lower than what my Wealth Manager would have charged me!!


Therefore it more important to do the asset allocation right, use low cost ETF  products and optimise investment than  try to find some  Dream mutual fund.

  • Liquidity Management  : My tool helps me to manage liquidity of my investment. This is very important because many times people have to liquidate assets just to meet immediate requirement.

what comes in instant Liquidity? Your Saving account  then  In 0-7 days Arbitrage Fund. From 1 month -1 year Lot of my P2P investment provide liquidity as I keep getting back EMI payment. P2P has been very helpful in providing balance between Liquidity,low volatility and high Returns.

I have considered debt funds in 1-3 year because they need atleast 3 year to become tax efficient.All equity and PF will fall in the last bucket.

After having a look at the Liquidity chart I can gauge  what needs to be done if I have to  allocate more in the nearby bucket if there is some cash outflow soon.

If you need help in structuring your portfolio and need this tool ,please drop me a mail .








Optimisation of Investment

People keep asking me which is the best mutual fund?

Which is the best stock in long term?

Will Crypto make it big?

Is Real Estate better than Stock ? Is P2P lending good?

I should be honest about it that I dont know the exact answers of these questions ! I can only predict based on the historical data I have .Maybe If we do a million simulation of the future in some simulation  you make a killing in crypto and in other its a dud.

The point is there are some controllable variable and some uncontrollable. We focus too much on the uncontrollable and too less on controllable.

For instance we want to buy the best MF! what is the best MF ? Its a function of the fund manager ,what if the Fund manager leaves. How good is our strategy now.!

The aim of investment should be to take exposure of the uncontrollable to the extent we can tolerate. Do not bite more than you can chew.While on other hand controllable variable should be exploited to it fullest potential .

So how should the strategy look like.

The 3 very important tenets of investment are

  • Saving
  • Asset Allocation
  • Liquidity

Each can make or break the investment goal. I have prepared a simple excel tool to optimise these three aspects.

Lets take an example of a 30 year old guy. He is able to make 100,000 per month ( which includes salary,PF, rent etc)

STEP 1: Before even starting to invest he needs to be cognisant of the assets and liabilities. Its paramount that you calculate all your monthly fixed and variable expense .You should be able to predict 95% of your  expenses.

How you save will have more impact than your choice of MF investment on the end corpus. I will demonstrate that shortly.

One thing which is very important is Insurance: health and Life . You do not want any health emergency to jeopardise your retirement corpus.

Lets see the sensitivity analysis of impact of small change in saving and small hike in assets on the end corpus considering  same investments.

Here my portfolio is giving 11% IRR approx for 10 years.I have calculated end Copus at various expense and salary levels

It is evident that by reducing 20% expenses and increasing earning by 15% I end up 50% higher corpus in a period of 10 years!!

This is very much in my control .How to do it .Very simple Have 2 different account

  1. Salary
  2. Investment

As soon as you get salary transfer everything  except your monthly expense to a different account. Use the other account for transferring SIPs etc.

If you think you are making some unnecessary expenses ,cut them, Instead of splurging money on fine dine every week do it alternate or monthly etc. Everybody has their vices and their priority and they can cut expense based on them.

I used to spend lot of money on gym supplements. I realised only after wasting lot of money and time that most were marketing gimmicks and I perform better even after not using 99% of them.Worst part was I used the same account for investment and expenditure and every month used to fall short of my goal to invest. A disciplined approach will go a long way

If you do not track your expenditure you will never realise that you overspend! Take ownership of both : your assets and your Liability.

In my next post I will demonstrate how I can optimise my investment and liquidity.






P2P portfolio Analytics( Feb 2019)

This month I have completed  1.5 years investing in P2P lending platforms. Overall the experience has been good. There were some hiccups though in the form of selecting good platforms,choosing category of loans but with experience you learn from your mistakes.  Today I will compare my  latest portfolio performance with the other asset classes for 1 year period

Portfolio Composition


January allocation


February Allocation

Portfolio Changes: I am still in the process of unwinding my Faircent exposure .

I  move my Faircent EMI to lenden .it is a good strategy as I am able to put staggered investment in Lenden  on various dates thus my cash inflows also become staggered across dates and makes it easy to reinvest

I2I portfolio is pretty much constant. Due to less number of loans in the platform I target 3-4 good loans every month.As loans are long dated the cashflow inflow is manageable

I am increasing my RupeeCircle and cashkumar  portfolio as I have not faced any defaults uptill now

The portfolio allocation of I2I and Lendenclub is not reducing much because of the compounding effect of the interest generated from the past investment.

Calculating Portfolio Performance: I consider loans delayed by more than 45 Days past due date as NPA. I use XIRR method to calculate returns as it is the most accurate. My post on calculation methodology  ( Lenden ROI calculation  )

I dont have any NPA Cashkumar and RupeeCircle in till now(new portfolio ).



Portfolio returns have  been stable .Had I not invested in Faircent and rather divided that money in other platforms my ROI would have been 18% plus.I have kept Rupeecircle and Cashkumar investment as 20% even though actual return is higher because I expect some delays as time passes thus I am provisioning for them.

Comparison with other asset classes


One year performance of my P2P portfolio has dwarfed  the  best performing equity and bond funds. Even the sharpe ratio has been excellent. It means my portfolio has delivered superior consistent return.

Axis Large cap delivered 9.3% .What are the chances of all the mutual fund you bought Axis .More than 30-40 Funds were not even able to deliver positive returns.

Gilt Fund delivered 10%. its a very good return for a bond fund but this is primarily because interest rates came down from the highs this year. Even the best bond traders could not have predicted it

This shows the unpredictability in a diversified P2P portfolio is far less than an equity or Gilt fund

It would be unfair to say that P2P is better than equity  or debt investment  because equity returns are always subjected to short term volatility  and people who have a short term horizon should refrain from such investments.

I would say it is good to have P2P investments as a part of your portfolio when you are looking for  high returns with manageable risk and decent liquidity.

Points to note

  • If somebody is just starting to invest I would not recommend calculating XIRR because your interest income is too low and slight delay of emi  etc can change the return drastically.Better gauge at starting will be to check the amount in delay and  subtract that much percentage from the portfolio published ROI.
  • In Lenden I use only Insta Loans using autodebit as I invest only 500 per loan and want to diversify as much as possible .I do not check individual loan as my rationale is if platform is underwriting properly with sufficient diversification my NPA will match with platform’s i.e if platform has 10% default my portfolio will also have 10% which is very good for 48% ROI loans
  • I prefer investing in a SIP fashion(Systematic Investment Plan). If I have a monthly budget of 10000 I will calculate how much I need to replenish in I2I and rupeecircle so that I can make my escrow balance a multiple of 5000 for further investment. Then what is left after that I put it in other 2 platforms depending on where I  want to increase allocation.

eg : if amount to invest 25000

Let’s say  I2I escrow balance :2000

I need 3000 minimum to  make it multiple of 5000

So I will invest 3000 or 8000

Same with Rupee circle.

Now the amount which is Left will be divided between cashkumar and Lenden depending on 2 factors a) where I want to increase exposure b) how much is available  in escrow of the platform( In lenden you may end  with up large cash inflow and do not want to increase it further which may cause delay in disbursement)

Strategy Going Forward: 

  • Move all Faircent EMI to Lendenclub(better risk adjusted Return)
  • Keep growing investment corpus in RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  • Increase investment in I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  • Increase investment in cashkumar( positives are:short term loans(<6 months), overall good platform performance with low npa, high interest)  Mail me for referral !
  • Use Statistical analysis to determine if there is  a pattern in default

People who wish to construct a  P2P portfolio can email me.

Large Cap Mutual Fund Replication using P2P and Options

“Mutual Funds Sahi Hai” , the omnipresent tagline these days has become a buzzword these days   if you watch TV or read newspaper. In one of the advertisement the protagonist draws the analogy between Mutual Fund and Test match where the probability of making money increases with time we spend holding the mutual funds.

The Interesting thing to note is that he uses the word probability and not guarantee. The ad ends with a blink and miss disclosure that   Mutual funds are subjected to market risk. What should an average investor make out of it. Is there a risk we are not cognizant of? Yes we certainly are ,because we do not know if the future will be like the past and if it is not then we could be a generation with negative return. Now the question  is how do we address this issue.

Lets start with check the last 1 year performance of the  Large Cap Fund vis-a –vis Nifty 50.

Nifty 1 year return : 6%

Funds which gave more than 5% .Almost zero.  You Can see all the top performing funds are ETF barring Axis Long Term Equity.

Its apparent  Nifty outperformed  most funds and technically bulk of investor lost to the Index and paid fees to the fund manager.

Isnt it unfair they get paid when you lose money too! Anyway that story for some other day.

Now we have established that Nifty 50 index is atleast as good as a large cap fund if not better. This means that we should buy  the Index?

The answer is No!

Do you realize a big difference between Equity MF and Debt. Debt pays interest Equity MF does not. If the market doesn’t move at all you are losing opportunity cost in the form of foregone interest .So how do I get the best of both world.

The answer is  Create a structured Product .Combination of Debt + Equity which will have all the upside of the Nifty but no downside.Sounds like a  scam but no.Its possible and very easy to do it.

Lets say I have 100 rs to invest .How do I replicate my Nifty upside  using options.

I buy an ATM call option. Lets check the price of  1 year Call option .Its around 7% for 10 months.You can purchase it using your broking account


Now I am left with 93 bucks. Where do I put it. I had published my annual return of 16.5% (P2P January Performance)  through my P2P portfolio. Lets take a more conservative approach and assume 13% return. At 13% 93 buck become 103 in 10 months.

Now lets Compare the performance with holding  Nifty 50 fund vs the hybrid product


Scenario I:

Bullish on the market but do not want to risk capital. Buy 1 Call ,invest rest in P2P

Scenario II:

Bullish on the market  ,Can take some risk. Buy 1 Call, Sell Put

Scenario III:

Super Bullish on the market  ,Willing to take full downside . Buy 2x Call,sell 1 Put

Even in the riskiest scenario 3 we are better off creating the hybrid product than buying a large cap Mutual fund.

I have taken conservative numbers where I am receiving 13% from P2P .In reality I can generate 15% plus returns and using it with options can outperform  large cap mutual funds

Its also pragmatic to optimise your money to make the most of it than just do what everyone else is doing.

Referral Codes and Link for P2P Platform:

  •  RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  •  I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  •  Cashkumar  (Mail me for referral)
  •  LendenClub (use code LDC11989)






Calculating Portfolio Return for I2I Funding

I had covered portfolio return computation for lendenClub in last post.

Uptill now it was really difficult calculating I2I return using XIRR method and I have to resort to NARR method using R programming.With the release of “My Account ”  feature it has become very easy to calculate portfolio performance.

Step1: Calculate the net income and NPA

I2I publishes the total income after deduction of the Fees under the heading

Now calculate the total amount of Principal under delay. For this go to “EMI  Status”  and sum all the outstanding principal which are more than 45 days past due. ie. if last payment date is 1 nov 2018 . It means 1 Dec 2018 should be next payment date and 45 days past is 15 Feb 2019. Or in  short  loan delay more than 75 days past last payment date are delinquent and you need to add the outstanding principal and consider them as default.

Obviously they can become regular loans in future but we will be conservative and consider them as default

Step 2: Calulate Return

We have the income and the defaults .Difference is the net earning. To get the cashflow go to “My Account”< Escrow Account Status and download excel.

Filter “Transfer to Escrow fund” entries .The Credit associated with these dates are cash inflows you had added to your account

We have now the dates with cash inflow. Covert text numbers into numbers using “text to column” excel function.  Reverse the series so that the latest date is in the end. For inverting series add a number series before the other columns and reorder it from large to small while  selecting “expand selection”.

Add the Net income with negative sign  as a new row with today’s date and then  use XIRR to calculate the return

In XIRR you  need to put date series, cash series and a guess number (put anything 10% etc). You will get your XIRR number.

This is your portfolio return based on the conservative NPA assumption.

Points to Note:

  • Calculate return after you receive bulk of your EMI payments
  • In I2I it takes larger portfolio size to start seeing stabilisation in  ROI due to higher minimum ticket size of 5000 compared to LendenClub
  • Total portfolio return is average  returns based  portfolio weights.

Referral Links and code

  •  RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  •  I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  •  Cashkumar  (Mail me for referral)
  •  LendenClub (use code LDC11989)



Calculating Portfolio Return for LendenClub

In my endeavour to create a robust P2P lending portfolio I will cover how I calculate return for my portfolio.I will start with LendenClub and in  the next  few posts will cover rest of the platforms.

The return provided on the platform are expected returns and can be misleading.That is a futuristic projection based on your loan investment and does not factor in the existing as well as potential NPA.

We need to calculate the Return on existing payments and NPA  of the portfolio.

2 method of calculating Returns are :

  • Net Annualized rate of Return( NARR)
  • Internal Rate of Return (XIRR)

Net Annualized Rate of Return is basically the Principal weighted rate of return. You put different amount in investment different months .Each Month you get different return. You calculate each month how much return you generate and what was the principal deployed and then you take the weighted average return

Problem is that this method does not  takes into consideration the amount of cash lying idle in the escrow amount not fetching any return. I will suggest using XIRR as we will find out it is a better approach.

XIRR : This method is fairly simple. It takes as input all the cashflow with the dates and the final amount achieved. One rate of return is calculated which will give us  that output based on the cashflow. As it takes our invested money ,cash drag if any due to escrow amount idle money is also factored in.


Now we know the method to calculate the return. One more thing we need to factor in is the NPA. We will deduct the NPA and   loans in delay  from the final result and then calculate the returns.

I use R programming language to calculate returns as it is fast and gives me more analysis capabilities like Future EMI projections etc

I will provide steps to calculate XIRR for lendenclub using excel as everybody is familiar with it.

Step1: Open Account section of LendenClub. Download the following  report from the date when you started investment.

  1. Account
  2. Income
  3. Investment History


Step2: Income Statement Sheet

Add all the entries under  credit heading

Add all entries under debit heading

Difference between the two is the net earning.

Step3: Investment History Sheet

Filter all the default ,written off and Delay 3 loans. Sum the principal outstanding. This is your potential default. Remember this is a conservative figure because some of the delay 3 loans will  be repayed but we want to take a conservative approach.


Filter all the “AddMoney” entries. this the money you have transferred from your account to Lenden.

Select 5 :Calculation

Your Final Account value is  sum of (Addmoney) + Interest earning – defaults

i.e. You add all the rows of add money then take the net earning you got from income sheet and subtract the default you calculated from investment history.

Now add the final amount as last row after all the add money rows. You need to invert the add money series also ( you may need to convert dates from text to date format. Just use Left function in excel(Left(date entry,11), this will remove the extra part after date. For inverting series add a number series before the other columns and reorder it from large to small while  selecting “expand selection”.


Now use XIRR ( make final amount as -ve). In XIRR you have need to put date series, cash series and a guess number (put naything 10% etc). You will get your XIRR number.

This is your portfolio return based on the conservative NPA assumption.


Points to Note:

  • Calculate return after 4th of 5th day  of month after which date you generally receive bulk of EMI .
  • I will calculate Return for other platform in a similar manner
  • Total portfolio return is average  returns based  portfolio weights.


Referral Links and code

  •  RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  •  I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  •  Cashkumar  (Mail me for referral)
  •  LendenClub (use code LDC11989)



P2P Portfolio Analytics (January 2019)

In continuation of my blog posts on  P2P returns and performance  I am publishing my  latest quarterly portfolio .  I have steadily increased my exposure across various platforms and my performance has started stabilizing which is a good indicator of Portfolio health due  to diversification.

Portfolio Composition

December Allocation


January allocation

Portfolio Changes: I am in the process of unwinding my Faircent exposure .The NPA scenario has still not improved .Hope to atleast get positive return in my investment in Faircent.

Have Kept lenden Portfolio almost constant. Reason is that most loans in lenden are of 3-4 months duration which causes lot of EMI inflow every month .I do not want to sit on cash surplus which means I have to  grow the Lenden portfolio slowly.

I2I portfolio has grown slightly .I use I2I for long duration lending thus my EMI inflow is pretty smooth and manageable

RupeeCircle and cashkumar are the new entry where I am in the process of increasing exposure

Calculating Portfolio Performance: I consider loans delayed by more than 45 Days past due date as NPA.This is  a conservative figure but gives me a good picture to understand portfolio performance. I am using XIRR in Lendenclub while NAR method in I2I to calculate return .With the development of My account page in I2I I will start using XIRR method in I2I too.

I dont have any NPA Cashkumar and RupeeCircle in till now(new portfolio ).



quarterly Performance

Points to note

  • As it is evident LendenClub has been performing really well. Lot of people stick to one platform which is giving good return.This is not a good way to invest as there are other problems sticking to one platform .Finding good  quality loans in one platform becomes tough after you have invested a substantial amount as you have lot of cash and few loans.Also platform underwriting may become worse when they scale ,so it is best to stay diversified.
  • The returns published on   dashboards  of most platforms are not actual return,they are expected return i.e the amount of money you will make in the investment provided they don’t default.Its a future earning.I post my actual returns based on the defaults thus my numbers look lower but will be closer to real returns.
  • Do not invest more than 5000 in one loan.It may haunt you later unless you have a huge portfolio

Strategy Going Forward: 

  • Move all Faircent EMI to Lendenclub(better risk adjusted Return)
  • Keep growing investment corpus in RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  • Increase investment in I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  • Increase investment in cashkumar( positives are:short term loans(<6 months), overall good platform performance with low npa, high interest)  Mail me for referral !
  • Will Run Portfolio analysis next month again and compare results
  • Will explore more platform .Platform covered  : finzy,Monexo,Lendbox,Faircent,I2I,Rupeecicle,cashkumar

People who wish to construct a quantitative P2P portfolio can email me.

P2P Loan Borrowing Comparison(with Fees)

Lot of people want to  borrow money online. With so many P2P platform available it becomes very difficult to assess where we can get the best deal. I have prepared a comparison of various P2P borrowing Platform charges.

Fees for each Interest rate category is given


Rupee circle is the best platform for a borrower from fees perspective.(Use code PIND145 to avail loans fast)

Borrower link : https://www.rupeecircle.com/borrower-register   

If you need a microloan (20-30k) then try both  RupeeCircle or Cashkumar.( mail me to get cashkumar referral)

If you have a decent Credit score and you need urgent loan I2Ifunding  should be able to provide interest at lowest levels.There interest rate are generally 2-3% lower than other platform.

I2IFunding Borrower Referral Link

So basically you should apply across I2Ifunding  and RupeeCircle   and compare the interest rate they are offering ,then add the fees I have mentioned which will give you the total cost. Try cashkumar  also if your loan requirement is less than 6 months and amount less than 50000

P2P lending Platform Fees Comparison

When it comes to investing in P2P platforms I have covered various aspects related to calculation of returns and factoring of defaults .One important factor in choosing a platform and duration loan I would want to add is Platform fees!

How is the Fees calculated? Each platform  has its own method of levying the charges.Some of them charge an upfront fees while other charge on the EMI. It is basically comparison of a flat interest rate vs reducing balance interest rate.How  does this impact us? Here is comparison between 1% Fees charged upfront on 10000 investment vs 1% charged  on ROI. Paying on total principal is more expensive for shorter tenors.

We have taken a 12 month loan with 1% fees deduced from ROI. We end up paying 54.25 versus 100 if we would have paid upfront. Paying upfront is better deal when tenor is longer as  your cost is spread across time.


Here are the Fees details of the most popular platforms:

  • I2I Funding: Charge 1% upfront plus gst . If you want to compare it with ROI based charges ,for 1 year it is equivalent to 2% deducted from ROI and 1.13% for 2 years. So longer tenor loans are better in I2I Funding.
  •  Faircent: Same as I2I funding though it has higher registration charges also.
  • LendenClub : It has ROI based fees. Fees is variable depending on which ROI category we are investing. For  Loans below 25%  you have to pay 1% while for 48% you end up paying 3%. As it is a ROI based fees tenor does not impact fees .Ideal for short duration loans
  • RupeeCircle: Charge 1% with each EMI similar to Lenden. One issue is they charge 50 Rs document handling fees .For disbursement size of 5000 it is equivalent to1% which makes the platform expensive for short term loans. Only beyond 18 months its feasible to invest in the platform at decent cost.
  • Cashkumar :ROI based fees which varies from 0.75% to 1.5%. One of the cheapest platform and ideal for short duration.
  • Monexo:  For Investment less than 1Lakh in escrow they charge 4% +gst = 4.72% from ROI which is a bummer!
  • Finzy :Only have 36 months loan and they charge 1% from ROI which is slightly more than I2I for equivalent tenor.

Below is a reference table where we can compare platform fees for various tenor .I have converted all Fees in ROI based fees.

It means all numbers are average annual interest you have to pay from your ROI if you invest in that platform in that tenor.

eg: FOR I2I in 18 month loan you pay 1.5%per annum of your ROI as fees while in 24 months you pay 1.13%.


I have highlighted the tenors for each loan where you should invest .In short this is how your platform and tenor combination should be:

0- 18 months :  LendenClub  and Cashkumar

18- 36 Months: For 23% and less ROI loans prefer I2I,For 23% plus loans go for RupeeCircle,As a rule longer the duration of loan safer the borrower I prefer.

Offcourse you can use LendenClub and Cashkumar for longer term loans also but its best to stay diversified.


Happy Investing!


LendenClub (use code LDC11989 to get discount)

RupeeCircle use code PIND145

For I2I with portfolio analysis use : https://www.i2ifunding.com/refer…

mail me at rohanrautela9@gmail.com to get referral for cashkumar


Credit Risk Funds Portfolio

I have been publishing my P2P portfolio every month .Another arsenal people can add to their investment portfolio is Credit Risk Fund.

Why to use? Everybody does not have a 10-15 year horizon which is the requirement for  an equity portfolio to get decent returns.Even then a large cap fund will not deliver more than 11-12% return.

People who want to invest for a shorter horizon tend to stick with RD or Liquid Fund which give out around 7%.P2P is one platform where we can get superior return in short tenor ,but its best to diversify in other asset classes too to have a balanced portfolio.

Return vs Investment Horizon

Risk?  Interestingly Credit Risk Funds and P2P have similar risk . In P2P risk is of individual lender defaulting while in credit risk funds risk is of  individual companies defaulting. Companies have more credibility than individuals hence the lower return.

How to Invest? The bottom line is if something is giving me around 10%  .I have around only  2-2.5% of margin of risk i.e I can afford to lose only 2.5% otherwise I am better off putting in liquid fund which gives 7-7.5%.

So how do I go about doing that!

I will first create such portfolio and then explain what will happen when a credit default event happens.

I am choosing 4 funds for the analysis. Things to look before investing

  • Expense ratio is not too high : around 1% max
  • They are diversified (not concentrated in 4-5 securities)
  • Historically fund has performed well

As we can see its quite evident that Aditya birla is most diversified and has good expense ratio too.Now what have we have to do is download portfolio holding details .You can use value research,AMC site etc.

Now my goal is to allocate money to various funds in a ratio so that in my complete portfolio no single security has more than 2% exposure.

This is the  calculated portfolio .

It means that if I have 1lakh to invest I will put 35k in aditya birla,30k in franklin ,25k in kotak and 15k in Baroda. These number are a ball park figure.Based on your risk reward preference you can deviate slightly but ensure you don’t  increase exposure  more than 3% in a fund.

Stressed portfolio:What will happen if some bond defaults .We already have a precedent ILFS. How have returns changed after that.

Lets assume we had ILFS in our portfolio and exposure was 2%

So 2% drop in my NAV right.

How will portfolio  perform now

What did I just see.Due to a default yield went up and our bond portfolio is giving 12.53% annualised yield which more than compensate for 2% loss in default.

So if we have a well diversified credit portfolio we can get decent returns and it emerges as good investment vehicle for medium term.Infact this these days due to inflated yield its an ideal time to buy credit funds

  • People who are retired or  have decent corpus (8 lakh plus)  to invest and want equity exposure can use Credit Risk Fund with Options to Create  principal protected  Large Cap Mutual Fund.
  • How to do it? We have established 9% plus return from Credit fund. 1 year ATM call option cost around 7% at current yield.  If we invest lets say 8.5 lakh in large cap  we  take complete downside risk.Instead of that buy ATM option which will cost 68000 . put the rest 7.8 lakh in credit fund. you will make 72000. Now you have exposure of large cap with principal protection