From their data, you can figure out which loans were offered to Institutional investors prior to retail.
I have not found a way to figure out which ones were not fully funded by the Institutional investors.
But they get 12 hours to pick through 25% of all the loans and buy the ones they want.
*Hypothetical statements coming up but very logical.
So maybe they only gobble up 15% of the 25% offered to them. 10% they don't consider the right risk return ratio. So now as a retail investor I've got 85% of the total population of loans. 10% smart money is saying is sub par returns. applying the same formula to the remaining population 60% of loans having a good risk return ratio (15%/25% =~60% of available loans to II) means that only 45% of loans with better risk return ratio's are available to the retail investors.
Now that 45% of loans which are good bets are placed on to the trading platform via a Batch job 4x a day. The computer programs can run queries against the available loans and make purchases in less than a second. There is no way a human can compete with that.
What is left are the loans which do not conform to the risk return profile the institutional investors are looking for. Which means the average retail investor is making choices with much smaller expectations of return.
I agree I don't have the hard data figured out, but I also don't think I've got access to the right information to substantiate my claims.
But I'm willing to bet in the past year since they went to 25% before retail gets a chance the returns for retail have gone down. Also, many, many bloggers including MMM have commented on the lack of availability of loans which fit their investment criteria. This anecdotal evidence I think further strengthens my claim.
I want to be clear, this is a hypothesis.
In order to parse the data to get accurate returns, I'd need to know which loans were fully funded by institutional investors prior to being offered to retail. The data point they provide is where the loan was First offered.
If I knew which ones where thrown back, then I could calculate the % of loans the II do not invest in and I could also calculate the returns on the ones they do invest in. (first offer only)
I could then apply these same factors across the entire population (because 25% of the population is a representative sample).
I have no way to know and will not unless Lending Club disclosed it, which loans are owned by retail and which ones are owned by II. That would be the quick and dirty to know returns.
My feeling remains the same and I'm certain there is some math somewhere which would confirm this. If you take 25% of the population, offer it to a select group then that group will perform better than the group who wasn't offered that same advantage.
Thus, I stand by my statement that advertising returns for the entire population when retail investors do not have access to the entire population is a material misstatement.