As a part of experimenting in the P2P market and diversifying I did a test investment with Pertuity Direct / National Retail fund.
Early in the year I bought $1000 of the National Retail Fund III in four $250 investments to see what the returns would actually be. All four investments were done in the same quarter. The money was transferred via ACH same as Prosper and LendingClub to National Retail Fund and used to purchase shares at that days' price. The price/share was highest at the end of a quarter right before they issued a payment and lowest early the next quarter right after. There was no historical data published to allow the investor to know in advance how the price/share had historically changed over time and know it was to their best advantage to purchase early in the quarter. Last month I received a surprise letter stating that they had not attracted the amount of investor capital their business model forecast, were not making the money they expected, and recommended I, as a shareholder in National Retail Fund III, vote in favor of the board's of directors' recommendation they liquidate the fund and shut down. The vote was taken and they shut down. A few weeks later my balance of $1011.51, representing principal + two quarters interest, was transferred via ACH back to my bank. The return was low, but I did not loose money.
The fate of the loans and how the Pertuity Direct lenders loans will be serviced through their term did not impact investors in National Retail Fund III.
They set up their operation as two businesses - Pertuity Direct that dealt with borrowers, and National Retail Fund that dealt with investors. National Retail Fund could invest in Pertuity Direct loans or other. When you bought into the fund you had no visibility on a loan by loan basis, or what % of the fund was in loans and what % was in queue in other investments (example T-Bills) when there were not enough Pertuity Direct loans to use up all the cash available in the fund.
jazz