Unfortunately, the summer continues to bring more negatives headlines for the embattled online lender. LendingClub’s Broad Based Consumer Credit (Q) Fund, the largest in-house portfolio run by LC, had its first negative month this past month after 63 consecutive months of positive performance. The fund has received $442m of redemption requests, accounting for 58% of total assets.
LendingClub CEO Scott Sanborn wrote in the letter to investors Tuesday that the June returns have been weighed down by a series of increases on borrower interest rates designed to entice new investments. Those rates will yield better returns for investors in the longer term – but for now under accounting rules LC Advisors must mark down the value of existing loans the fund holds that carry lower coupons. “It is important to remember that these markdowns are not reflective of the expected cash flow performance of underlying loans held by the Fund,” Mr. Sanborn wrote.