Post by dan1 on May 20, 2017 21:29:36 GMT
Thought I'd share my thoughts on achieving higher than average risk-adjusted returns. I'm really a novice, having previously only invested and then sold to extract the referral bonus. There's probably a lot of cross-over with the bots thread but I haven't written one - I'm doing this all manually.
Aims
Returns after fees & defaults of at least 10%, preferably 15%+ (invest only in C D & E loans) before tax (interest & capital gains I assume, although trading is liable to income tax?). Improve considerably on the expected bad debt by selling before the next repayment date. I should rarely pay the 1% servicing fee but will pay the 0.25% flippers tax.
Buying
Autobid - enable C D & E at max 1% of portfolio. Set the secondary offer rates to max to avoid picking up damaged loan parts and/or those near the next repayment date. Probably pointless but just on the off-chance!
Primary market - bid in multiples of the min £20 (easier to sell) when alerted by Page Monitor.
Secondary market - refresh loan parts with Max price £20 and Max premium 0% to buy undamaged (i.e. no notes on Repayments page) parts with at least 14 days remaining. These appear sporadically, which I assume is from auto-sell orders that sell at par.
Selling
Buying is straightforward but I'm struggling with a strategy to maximise the gains when selling. I've been listing C straight after buying for 0.5% premium, i.e. a profit of 0.25% plus accrued interest. I'm holding D & E until 7 days before the repayment date and gradually reduce the premium until sold. List all unsold parts at par the day before the repayment date - hopefully to be picked up by autobid.
I could just hold until the day before and list at par.
Risks
- RBR before 1st repayment date (CCJ or some other company event)
- Rates rise (reflection of higher than expected bad debt). Par sales should still be picked up by autobid though.
- SM sales grind to a halt (perhaps due to an issue with FC, investor confidence, economic shock etc)
This really is quite labour-intensive (hence the bots!) and would require a five figure investment to be worthwhile but I enjoy playing the game. Question is have I missed anything important or glaringly obvious? Do sales premiums significantly juice returns - I guess I'm asking whether it's worth flipping D & E straight away for the higher premium compared to C?
Edit: I should have stated that I'm looking at this very much through a quantitative lens rather than the traditional method of DD. One obvious omission of mine was loan size - the dynamics of a £5k E is very different to that of a £250k C on the secondary market, not that I have any chance of catching a £5k E on the primary market without a bot!
Aims
Returns after fees & defaults of at least 10%, preferably 15%+ (invest only in C D & E loans) before tax (interest & capital gains I assume, although trading is liable to income tax?). Improve considerably on the expected bad debt by selling before the next repayment date. I should rarely pay the 1% servicing fee but will pay the 0.25% flippers tax.
Buying
Autobid - enable C D & E at max 1% of portfolio. Set the secondary offer rates to max to avoid picking up damaged loan parts and/or those near the next repayment date. Probably pointless but just on the off-chance!
Primary market - bid in multiples of the min £20 (easier to sell) when alerted by Page Monitor.
Secondary market - refresh loan parts with Max price £20 and Max premium 0% to buy undamaged (i.e. no notes on Repayments page) parts with at least 14 days remaining. These appear sporadically, which I assume is from auto-sell orders that sell at par.
Selling
Buying is straightforward but I'm struggling with a strategy to maximise the gains when selling. I've been listing C straight after buying for 0.5% premium, i.e. a profit of 0.25% plus accrued interest. I'm holding D & E until 7 days before the repayment date and gradually reduce the premium until sold. List all unsold parts at par the day before the repayment date - hopefully to be picked up by autobid.
I could just hold until the day before and list at par.
Risks
- RBR before 1st repayment date (CCJ or some other company event)
- Rates rise (reflection of higher than expected bad debt). Par sales should still be picked up by autobid though.
- SM sales grind to a halt (perhaps due to an issue with FC, investor confidence, economic shock etc)
This really is quite labour-intensive (hence the bots!) and would require a five figure investment to be worthwhile but I enjoy playing the game. Question is have I missed anything important or glaringly obvious? Do sales premiums significantly juice returns - I guess I'm asking whether it's worth flipping D & E straight away for the higher premium compared to C?
Edit: I should have stated that I'm looking at this very much through a quantitative lens rather than the traditional method of DD. One obvious omission of mine was loan size - the dynamics of a £5k E is very different to that of a £250k C on the secondary market, not that I have any chance of catching a £5k E on the primary market without a bot!
.