easylender
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Post by easylender on Jan 12, 2020 15:17:58 GMT
In P2P, diversification of each lenders loans among multiple borrowers is absolutely vital to mitigate risk. In my experience CrowdProperty autoinvest will invest your funds into multiple tranches of the same loan, and into multiple loans with the same borrower. For this reason it is not, in it's current form, fit for purpose. The only reason it may seem stress-free is ignorance of the risks being taken. It certainly helps the platform, and lenders to lend out funds faster, but it lacks what should be regarded as a platforms basic duty of care towards the lenders.
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archie
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Post by archie on Jan 12, 2020 15:23:36 GMT
In P2P, diversification of each lenders loans among multiple borrowers is absolutely vital to mitigate risk. In my experience CrowdProperty autoinvest will invest your funds into multiple tranches of the same loan, and into multiple loans with the same borrower. For this reason it is not, in it's current form, fit for purpose. The only reason it may seem stress-free is ignorance of the risks being taken. It certainly helps the platform, and lenders to lend out funds faster, but it lacks what should be regarded as a platforms basic duty of care towards the lenders. You have the option to skip any autoinvest loan (Manually). I've skipped loans where I've invested in an earlier tranche.
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easylender
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Post by easylender on Jan 12, 2020 15:28:05 GMT
I do use autoinvest, but to achieve comfortable levels of diversification have to manually check each loan, and make frequent use of the "skip next project" option. This doesn't make it safe for the time strapped investor.
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easylender
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Post by easylender on Jan 12, 2020 16:05:35 GMT
Sorry to keep going on about it but I think this is an important subject. There is currently a project with 13 tranches on this platform. With autoinvest as it currently functions it would seem far too easy for the unwary lender to become near 100% invested in this one project. The chances of this happening are higher than might appear at first sight. This is because other, diverse, projects will be heavily subscribed and so lenders will only get small chunks, but this 13 tranche project is under subscribed and so each tranche will be eligible for the full investment chunk from autoinvest.
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p2pfan
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Post by p2pfan on Jan 12, 2020 16:21:50 GMT
Sorry to keep going on about it but I think this is an important subject. There is currently a project with 13 tranches on this platform. With autoinvest as it currently functions it would seem far too easy for the unwary lender to become near 100% invested in this one project. The chances of this happening are higher than might appear at first sight. This is because other, diverse, projects will be heavily subscribed and so lenders will only get small chunks, but this 13 tranche project is under subscribed and so each tranche will be eligible for the full investment chunk from autoinvest. You are making a very valid point. CP AutoInvest should have the option of opting out of future tranches and/or setting a cap of amount invested into any one loan. For my curiosity, which is the loan with 13 tranches? I presume you can't name, but the city or start of the postcode etc. would enable me to find it.
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archie
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Post by archie on Jan 12, 2020 16:27:43 GMT
For my curiosity, which is the loan with 13 tranches? I presume you can't name, but the city or start of the postcode etc. would enable me to find it. See the current live project.
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easylender
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Post by easylender on Jan 12, 2020 16:29:18 GMT
For my curiosity, which is the loan with 13 tranches? I presume you can't name, but the city or start of the postcode etc. would enable me to find it. p2pfan It is currently the only live project. Just go to the bottom of the page and select projects to get there.
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Post by Ace on Jan 12, 2020 16:41:35 GMT
I agree. IMO a limit per loan should be top of CP's priorities for platform improvements. And Limit per borrower should be second on the list. CrowdProperty Representative, any idea when these improvements might be implemented?
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Post by skidrow on Jan 12, 2020 16:42:20 GMT
I agree that this is a serious issue.
For my part, I now avoid loans of tranche 2 or above because I don't have the time (or perhaps just refuse to find the time) to check whether the loan is a new one to me.
I am comfortable doing this because I'm reasonably diversified already and am taking steps to reduce my overall exposure to p2p. Having said that, CP is one of my favourites platforms and I'm not reducing here yet.
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Post by bobsmydog on Jan 12, 2020 16:52:57 GMT
Yes I totally agree that the autoinvest algorithm should be designed to invest in just one tranche.
Having to spot upcoming additional tranches and opting out rather defeats the hands off approach to diversification to reduce risk.
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easylender
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Post by easylender on Jan 14, 2020 0:53:43 GMT
I agree. IMO a limit per loan should be top of CP's priorities for platform improvements. And Limit per borrower should be second on the list. CrowdProperty Representative , any idea when these improvements might be implemented? I agree. What is really required by lenders to be "stress-free" is that autobid limits the amount lent to any one borrower to the bid limit. It's not just multi-tranche loans that lenders need to beware of, but also multiple loans to the same borrower (and there are some). However, it is in the interests of the platform to lend out funds as quickly as possible, and so may view such an enhancement to autobid as a restriction to lending and so not in their interest. This is a situation where the interests of the platform and the interests of lenders are not aligned. I think that how a platform handles this situation is a good test of whether or not lenders can trust them. I do hope that CP manage to see this from the lenders point of view.
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zlb
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Post by zlb on Jan 14, 2020 11:06:19 GMT
Sorry to keep going on about it but I think this is an important subject. There is currently a project with 13 tranches on this platform. With autoinvest as it currently functions it would seem far too easy for the unwary lender to become near 100% invested in this one project. The chances of this happening are higher than might appear at first sight. This is because other, diverse, projects will be heavily subscribed and so lenders will only get small chunks, but this 13 tranche project is under subscribed and so each tranche will be eligible for the full investment chunk from autoinvest. you address precisely what I came up this thread to say, it's worth going on about, it's the very thing that has weakened other platforms. I think that the current state feels disappointing because it reminds me of my uneducated first attempts at Lendy. For auto invest top really be what it was designed for, it at least needs to offer investment once per project, not once per tranche. And obviously if the same single borrower is guarantor against multiple projects, that very much weakens the security, so really auto invest ought to select one project per borrower if possible. @crowdproperty Representative
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littleoldlady
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Post by littleoldlady on Jan 20, 2020 21:44:43 GMT
If CP agree to modify their system I suggest that they scrap "Skip next project" and replace it with options on each loan to "Skip this project" and "Skip all projects to this borrower".
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zlb
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Post by zlb on Jan 21, 2020 23:41:20 GMT
In the mean time, is there a way that a check list can be created here of multi-tranche loans that is of greater benefit than individual private records? (hope I can download my loans rather than have to login every time to check).
I think CP really needs to take on board what has happened re other types/size of development, and how RICs valuations are at risk of not standing up to insurance claims for development valuations.
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alibaba
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Post by alibaba on Jan 22, 2020 9:01:14 GMT
In the mean time, is there a way that a check list can be created here of multi-tranche loans that is of greater benefit than individual private records? (hope I can download my loans rather than have to login every time to check). I think CP really needs to take on board what has happened re other types/size of development, and how RICs valuations are at risk of not standing up to insurance claims for development valuations.
very valid point
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