Attitudes to exposure?

I wouldn't say it is stupid, but the historical evidence doesn't really support the belief that A (or even A+) is really a lot safer than C or C- .. of course right now the rates are sometimes not that different either.

As for exposure - well 0.5% is all very well, but it does mean you have ~200 holding to monitor (or not .. depends on the effort you put in I guess). I'm quite happy with higher exposure, but I rarely hold anything for the full duration .. for loans that I'm likely to have to (see 'property loans') I probably aim at 0.5%-1% too.

My current strategy might be described as "maximally diversified". I don't bid more than £40 in a loan (and usually it's £20) unless I feel there's a good reason to (cashback, property, staggeringly good rate). Since I'm only risking £20 or so there's not much point doing a lot of DD, which I don't have the time, knowledge or tools to do properly. I also don't chase the highest rate, I pop in a couple of times a day and bid any available funds at rates I think stand a chance of staying in.

I don't bid down to MBR except for 6, 12 and some 24 month loans which I'm likely to hold for the duration, where MBR is actually quite good value. I've got about as much in FC as I want so I don't add funds except for exceptional events like a rate spike, cashback offer or good property loan, so I fund bids from repayments and selling parts. I usually have a few parts up for sale at a small markup, usually loans about 6 months or so old, plus any rogues, which dribble away and provide new bid funds.

I don't have a preference for risk band, except I'm wary of C- because I don't think the 15% max gives much headroom above MBR. Recently I have been preferring A+ and A because there's a chance that I'll be in the higher tax bracket this year (which is also why I'm not adding much more to FC, preferring platforms with a provision fund).

I don't think any strategy is stupid or wrong, except perhaps turning on autobid, it's whatever suits the individual.

My FC holding is small (currently about 120 x £20 parts). Having reached the 1% diversification suggested by FC, I am moving to 2 x £20/ Loan. This will then grow to 3 x £20 as invested cash increases.

I Avoid C-, and having set an absolute pain threshold of 6.5% return after fees and expected losses (Ie well above MBR) , bid on few A+.

This also means I rarely take loan parts on smaller, under £75k, loans

All holdings are sold at the best available premium after 3 - 4 months. Since flippers are very short term holders the premium available seems to increase as the available loan parts fall.

After a year or so I have 1 total loss, 1 slow paying Auto Trader (Well known in these parts), and a welsh builder who went pop before the first payment (Last payment made by the guarantor?).

The first two were purchased loan parts from before I developed my current strategy.

I do very little DD, although some of the fraudsters, potential bankrupts and solicitors are fairly obviously avoidable, as are all businesses going to the next level or other idiot jargon.

Property purchased for cashback is sold ASAP.

My main savings platforms are RS and Zopa. I consider FC to be a hobby,not an investment,  and is a little like online gambling , but at least offers the chance of a return. (Watching flashing bids at the end of an auction resembles a roulette wheel)

Currently my gross rate is 11.8%, and the annualized return has been 11.5%