Kuflink offers three different types of products – ‘self-select’, ‘auto-invest’, and IFISA. The auto-invest and IFISA products have the same investment profile. Investors can choose from two fixed term products. Kuflink currently offers a 1 year investment with an interest rate of 3.99%, a 3 year product with a rate of 5% and a 5 year offer at 5.35%. Investments made into auto-invest and IFISA products are pooled together, and used to purchase multiple loans (currently only 7 loans but this is expected to grow to more than 20 soon). Kuflink makes a 5% co-investment into all loans in the investment pool. If any loans default, this 5% co-investment absorbs any losses first.
IFISA products provide tax free income for UK resident taxpayers. The IFISA offered by Kuflink is one of the best we have seen in the P2P market, as it is simple, and there are no recurring fees. This makes it very attractive relative to some other IFISA products that we have seen, which often levy fees of up to 1% pa. Full details are provided on the Kuflink site.
The self-select option has two key advantages over the auto-invest and IFISA options. Firstly, the rates available are higher – from 5 to 7.2% (typically around 6.75%). Secondly, the level of loss protection investors receive is higher. While Kuflink has recently reduced its co-investment from 20% to 5%, it now provides a loss guarantee of an additional 15% on top of its co-investment. While we think this structure is not quite as attractive as the previous one, we still think the self-select product offers an attractive level of return versus risk. It also makes Kuflink loans one of the lowest risk options available currently for British P2P investors. That’s because firstly Kuflink cap their loans at 70% of collateral values, which minimises the risk of a loss in the event of a default. If there is however a loss, Kuflink’s 20% co-investment and loss guarantee will absorb any losses first.
We are fans of Kuflink. We recently interviewed their CEO (link here). Kuflink offer a range of investment products that will be suitable for a wide range of investors. Most loans are 6-12 months which we think is an ideal term for most P2P investors. Our preferred product is the self-select loan account, due to the higher rates of interest and extra protection from the 20% loss protection. However the IFISA will also be popular for many investors, as it offers tax free savings, reasonable returns, low fees, and simplicity. We would not recommend the auto-invest option as it is very simple and easy to create a similar self-select portfolio that will offer better returns, and lower risk.
Kuflink are currently running a sign-up bonus promotion for new investors. If you visit Kuflink and invest using this link you will receive a £100 bonus after making your first investment (min £500 investment). Participating in this offer will help to support the research provided by Explore P2P.