JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Nov 8, 2018 9:14:55 GMT
I see that both the GBBA2 and PSIA have large allocations of a few loans to one borrower. In my case as a recent investor in these auto accounts my exposure adds up to 10% of the account totals. Is this the same for everyone and will it always be the case where there is one very large borrower? I had hoped that the two accounts would hold different loans.
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Post by Deleted on Nov 8, 2018 9:32:30 GMT
One of the disadvantages of autoselect accounts over manual select accounts is that lenders can often find their money lent to borrowers via autoselect who they would not lend to via a manual select account. Another disadvantage is that sometimes lenders can find their money lent to the same borrower across different autoselect accounts that exposes them to a higher single borrower risk than they might feel comfortable with. There can be some mitigation when such situations go wrong if the P2P platform has a provision fund that delivers on what it promises. If you have the time, my personal recommendation would be to go for manual selection rather than autoselection. If you do not have the time for manual selection, the philosophical approach might be that autoselect in its full glory, warts and all, will give a better return than having money sat at your bank – so whilst autoselect might not maximise your returns when you lend to people that you would not otherwise choose to and it goes wrong, you will be better off than at the bank.
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lara
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Post by lara on Nov 8, 2018 9:48:17 GMT
Or go for the QAA or 30 DAA for automatic maximum diversification.
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cb25
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Post by cb25 on Nov 8, 2018 10:02:05 GMT
I see that both the GBBA2 and PSIA have large allocations of a few loans to one borrower. In my case as a recent investor in these auto accounts my exposure adds up to 10% of the account totals. Is this the same for everyone and will it always be the case where there is one very large borrower? I had hoped that the two accounts would hold different loans. What is your single highest allocations to one loan in a specific 'packaged' account (e.g. GBBA2, PSA)?
Historical examples exist of up to 20% (I've got one - loan 227 in the original GBBA), but allocation/re-allocation tends to be better these days.
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Post by jevans4949 on Nov 8, 2018 10:06:55 GMT
In the case of GBBA1, the interest rates offered to lenders became unsaleable to borrowers. In the case of GEIA, the energy market also became unattractive to smaller borrowers (because of the reduction in subsidies). If neither of these external influences had arisen, these funds would have been able to continue indefinitely, with new loans being issued and the funds able to carry the loans which turned out to be dud. In the circumstances, the good loans in these funds have been repaid, and we are left with the dross.
No doubt they seemed like a good promotional strategy for AC at the time, but there was no "exit strategy". Had AC left themselves a loophole to reduce the interest rates, then GBBA2 need never have happened, new loans would have appeaered in these accounts, and the average losses on these funds would have been "acceptable".
If you put your money into a regular bank deposit account, or a "unit trust" account, losses (to the bank / investment company) are invisible to you, unless the whole loan book becomes unviable (e.g. self-certified mortgages) and the bank goes bust. With P2P they are visible. With "black box" accounts like those under discussion, the losses are visible, but you can do nothing about them.
Disclosure: I decided early on not to go into these accounts, as I am time-rich, and I stayed in the MLIA. D.M. looked dubious to me from the start, so I am not invested in it. I have a small amount in one of the wind turbines, but managed to avoid the others.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Nov 8, 2018 10:14:49 GMT
What is your single highest allocations to one loan in a specific 'packaged' account (e.g. GBBA2, PSA)?
Historical examples exist of up to 20% (I've got one - loan 227 in the original GBBA), but allocation/re-allocation tends to be better these days.
For the GBBA2 it is 4.28%, a loan which was due for repayment.
For the PSA it is 3.62, to the large borrower I was asking about.
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cb25
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Post by cb25 on Nov 8, 2018 10:22:49 GMT
What is your single highest allocations to one loan in a specific 'packaged' account (e.g. GBBA2, PSA)?
Historical examples exist of up to 20% (I've got one - loan 227 in the original GBBA), but allocation/re-allocation tends to be better these days.
For the GBBA2 it is 4.28%, a loan which was due for repayment.
For the PSA it is 3.62, to the large borrower I was asking about.
My largest GBBA2 allocation is for loan 544, which is 3.78% of my GBBA2 total My largest PSA allocation is for loan 414, which is 6.14% of my PSA total
Were the percentages you quoted measured against your GBBA2/PSA totals (resp), or against your total portfolio?
I'd expect the within-GBBA2 and within-PSA percentages to be near identical across all lenders.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Nov 8, 2018 10:33:44 GMT
For the GBBA2 it is 4.28%, a loan which was due for repayment.
For the PSA it is 3.62, to the large borrower I was asking about.
My largest GBBA2 allocation is for loan 544, which is 3.78% of my GBBA2 total My largest PSA allocation is for loan 414, which is 6.14% of my PSA total
Were the percentages you quoted measured against your GBBA2/PSA totals (resp), or against your total portfolio?
I'd expect the within-GBBA2 and within-PSA percentages to be near identical across all lenders.
Interesting that your percentages are different, maybe because I have only used these accounts for a month. It is a percentage of the total in the individual account with 5 figures in each.
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benaj
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Post by benaj on Nov 8, 2018 10:39:48 GMT
For me:
PSA: I have 7.1% stuck from peak investment in the account, 3 loans have suspension. After starting the withdrawing process, the largest part remains stuck is 62%!
My GBBA2 has 195 loans, but only 167 loan parts are >1%, the largest part is 3.9%, 5 active loans >1% loan part have suspension.
QAA and 30DAA shares the same diversification, they have 428 loan parts.
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cb25
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Post by cb25 on Nov 8, 2018 10:56:31 GMT
With regard to the PSA loans 414 (my highest % in PSA) and loan 470 (my 3rd highest PSA %) are suspended and I'm running down my PSA holdings, i.e. as money is repaid I withdraw it. That would have the effect of making the % allocations in suspended loans higher as they can't be re-balanced.
I was wrong to say "I'd expect the within-GBBA2 and within-PSA percentages to be near identical across all lenders." without caveats. That probably won't apply if there are suspended loans, as that effectively 'freezes' the amount invested in the loan.
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Post by delboy711 on Nov 8, 2018 11:51:46 GMT
GBBA2 and the other black box accounts will automatically rebalance holdings by exchanging loan parts between customers. So everyone should end up with a similar proportion of holdings. But it will ignore any holding of less than £20 (I think), so if you are just dipping your toe in the water with a small sum in the account, you may have some holdings being a much higher percentage of the total.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Dec 12, 2018 9:33:10 GMT
Because I was unhappy about the excessively large amounts allocated to #544 by both PSA and GBBA2, a loan due for repayment when I joined these accounts and now extended, I decided to withdraw from both in favour of the QAA.
Should I have been surprised to find after a few days that most of the other loans have been sold to the extent that that loan is now nearly 50% of my remaining investment in GBBA2 and only a tiny portion has been sold?
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SteveT
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Post by SteveT on Dec 12, 2018 9:57:27 GMT
Because I was unhappy about the excessively large amounts allocated to #544 by both PSA and GBBA2, a loan due for repayment when I joined these accounts and now extended, I decided to withdraw from both in favour of the QAA.
Should I have been surprised to find after a few days that most of the other loans have been sold to the extent that that loan is now nearly 50% of my remaining investment in GBBA2 and only a tiny portion has been sold?
Not really, no. £120k of #544 is currently offered for sale, so your other PSA / GBBA2 loans with no (or low) availability were always likely to sell much faster.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Dec 12, 2018 10:16:52 GMT
Not really, no. £120k of #544 is currently offered for sale, so your other PSA / GBBA2 loans with no (or low) availability were always likely to sell much faster. Which is what annoys me about these automated accounts, dumping large amounts of loans nobody would choose to invest in into one's account, then you seemingly cannot get rid of them.
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Post by hammertime on Dec 12, 2018 10:24:34 GMT
Why not do it manually.
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