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Post by khampson on Mar 31, 2017 16:15:19 GMT
I have a question about autobid, will autobid buy from the secondary market or do the bots get their first? Also can I set a maximum amount to bid in pounds or is this done as a percentage of available funds with FC autobid set up.
Thanks
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bigfoot12
Member of DD Central
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Post by bigfoot12 on Mar 31, 2017 17:06:42 GMT
a) Yes autobid will buy from the secondary market by default, but
b) You don't want it to as I would expect that a higher proportion of parts for sale are 'damaged'.
c) You set a proportion and your choices are 1%, 0.5% or 0.25%.
d) If you want to be sure to exceed 6% you might want to use advanced settings and turn A+ off.
e) Also using advanced settings you might want to set the rates for secondary market purchases high because of (b)
Auto bid is poor, you are unlikely to to buy any D or E loans, with the exception of a few very large and unloved ones. However, the flow of new loans is high so you will be apply to lend out your money using only the primary market.
(I am reducing my activity on FC.)
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Post by khampson on Apr 1, 2017 13:42:50 GMT
a) Yes autobid will buy from the secondary market by default, but b) You don't want it to as I would expect that a higher proportion of parts for sale are 'damaged'. c) You set a proportion and your choices are 1%, 0.5% or 0.25%. d) If you want to be sure to exceed 6% you might want to use advanced settings and turn A+ off. e) Also using advanced settings you might want to set the rates for secondary market purchases high because of (b) Auto bid is poor, you are unlikely to to buy any D or E loans, with the exception of a few very large and unloved ones. However, the flow of new loans is high so you will be apply to lend out your money using only the primary market. (I am reducing my activity on FC.) So if I invested at 0.25% is that of money invested in the platform or money available to invest? The minimum investment is £20? So if it works out that 0.25% is less than £20 nothing would be invested? Thanks
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bigfoot12
Member of DD Central
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Post by bigfoot12 on Apr 1, 2017 13:55:37 GMT
I think that it is 0.25% of your total portfolio (including defaults). I think that it will invest £20 even if that is more than 0.25% of your portfolio
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Post by dan1 on May 17, 2017 8:05:43 GMT
I have a question about the Secondary Offer Rate on autobid.
The default setting is the same as the Primary Offer Rate, which is the weighted average rate of new loan requests. However, the information on the Secondary Offer Rate says "Select the minimum gross interest rate you would like to buy loan parts from other investors". There is no mention of any weighting so the seller would have to offer a bigger discount for shorter dated loans with correspondingly lower rates. Is this correct?
Not sure I described that well, perhaps an example will help. e.g. the Primary Offer Rate on E is 21.5% but the 6 month rate is 17.9% so someones autobid on default won't purchase 6 month loans on the SM without them being discounted, the shorter the loan the bigger the discount required.
I want to use autobid to sell so I'm just trying to understand the rules first!
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nick
Member of DD Central
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Post by nick on May 17, 2017 14:54:59 GMT
I have a question about the Secondary Offer Rate on autobid. The default setting is the same as the Primary Offer Rate, which is the weighted average rate of new loan requests. However, the information on the Secondary Offer Rate says "Select the minimum gross interest rate you would like to buy loan parts from other investors". There is no mention of any weighting so the seller would have to offer a bigger discount for shorter dated loans with correspondingly lower rates. Is this correct? Not sure I described that well, perhaps an example will help. e.g. the Primary Offer Rate on E is 21.5% but the 6 month rate is 17.9% so someones autobid on default won't purchase 6 month loans on the SM without them being discounted, the shorter the loan the bigger the discount required. I want to use autobid to sell so I'm just trying to understand the rules first! By default (ie if you do not use advanced settings), autobid will buy any loan part on the secondary market that is listed at par, ie there is no minimum rate and you could end up buying some old loans that were issued at historically lower rates (eg before fixed interest rates were introduced). This also means that when left in default settings, autobid may buy loan parts listed at par even if there are more competitively priced loan parts in the same loan being listed at a discount. I believe the reason that autobid by default only buys at par is to match liquidity with autosales which are also fixed at par.
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Post by dan1 on May 17, 2017 15:20:01 GMT
I have a question about the Secondary Offer Rate on autobid. The default setting is the same as the Primary Offer Rate, which is the weighted average rate of new loan requests. However, the information on the Secondary Offer Rate says "Select the minimum gross interest rate you would like to buy loan parts from other investors". There is no mention of any weighting so the seller would have to offer a bigger discount for shorter dated loans with correspondingly lower rates. Is this correct? Not sure I described that well, perhaps an example will help. e.g. the Primary Offer Rate on E is 21.5% but the 6 month rate is 17.9% so someones autobid on default won't purchase 6 month loans on the SM without them being discounted, the shorter the loan the bigger the discount required. I want to use autobid to sell so I'm just trying to understand the rules first! By default (ie if you do not use advanced settings), autobid will buy any loan part on the secondary market that is listed at par, ie there is no minimum rate and you could end up buying some old loans that were issued at historically lower rates (eg before fixed interest rates were introduced). This also means that when left in default settings, autobid may buy loan parts listed at par even if there are more competitively priced loan parts in the same loan being listed at a discount. I believe the reason that autobid by default only buys at par is to match liquidity with autosales which are also fixed at par. Thanks nick. Your explanation makes sense and it's what I'd assumed prior to reading the information on the autobid page. The upshot is that there is an easy way to get rid of those higher risk loans just prior to the repayment date, even if it incurs a 0.25% tax.
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