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Post by yorkman on Aug 11, 2017 15:58:30 GMT
I note that this week's update gives projected Core returns of 4.06% and Classic 3.69%. That's more than 10% difference. Given that they are both investing in the same market is this a random anomaly or is something more devious afoot (like trying to get up to invest in Core rather than boosting our investment in Classic)?
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ashtondav
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Post by ashtondav on Aug 11, 2017 16:08:20 GMT
Not devious, just common sense from their perspective. They are putting a blend of loans into classic to give a lower return than core.
Makes sense if they want folks to transfer, and also classic is under SG so you would expect a somewhat lower rate.
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Post by yorkman on Aug 11, 2017 16:13:55 GMT
... also classic is under SG so you would expect a somewhat lower rate. Not true. I don't think one should naturally assume that. Strikes me a devious practise. Others may disagree.
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aju
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Post by aju on Aug 11, 2017 17:09:26 GMT
I think the point was that the SG cover on classic warranted a slightly higher core interest rate - not sure but at the time of inception it was about 0.5% higher for the reason that ashtondav mentions. Classic is still running until Dec 1st but there must be a lot of SG going to ISA core now as I'm picking up quite a bit of SG protected loans in my ISACore loans.
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panda
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Post by panda on Aug 12, 2017 6:17:47 GMT
Isn't that the usual argument against provision funds, to be fairly certain of covering losses you have to over fund the provision which means less interest for lenders. On the other hand if the estimates of bad debt are too low the Core product just won't return the projected rate.
At the minute you can chose your poison.
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