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Post by WestonKevTMP on Apr 3, 2017 14:56:34 GMT
These are unsecured loans to individuals, so no security to evaluate. People borrowing at these rates probably have low credit scores or they would get the money another way. It is a very risky type of lending. Not necessarily. Of course there are a lot of loan providers in the UK servicing the impaired credit population (sub-prime). However there are many segments that don't necessarily have problems - for example " thin files", young/retired, transient renters. Historic arrears but today working and with no issues. In addition not everyone has a credit card or wants a loan over 12+ months - for a financial need between £250 and £1,000 born out of a short term need (e.g. broken boiler), then often they only want a loan over a matter of weeks and not months. That's why The Money Platform talks about " short term lending", and not sub-prime.
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Post by WestonKevTMP on Mar 30, 2017 13:20:55 GMT
In fact the more I look at the listed trusts, the performance seems quite poor. For example a couple of larger funds invested in direct lenders and asset-backed investments; GLI Finance:Downing ONE VCT plc:
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Post by WestonKevTMP on Mar 30, 2017 11:34:05 GMT
And to put it in a SIPP or ISA, which is why I own a couple of disappointing investments such as VSL. Old adage, " never make an investment based only on the tax advantages".... .... Not of course that you were to know they would be bad investments.
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Post by WestonKevTMP on Mar 30, 2017 10:56:40 GMT
And if property is your thing because you like the asset security and supposedly less volatile nature.... ....As an example, the performance of Real Estate Credit Investments is equally poor: So really. It makes you wonder what's the point.... Kevin.
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Post by WestonKevTMP on Mar 30, 2017 10:50:34 GMT
Another example, the SME Loan Fund PLC performance is poor; So why lend through a dedicated SME loan fund with high fee earning "experts", when you could have simply lent directly through, for example, Funding Circle, and earned 7% AER plus consistently year on year, with no volatility.
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Post by WestonKevTMP on Mar 30, 2017 10:42:45 GMT
I am in Ground Rents Income, which has done reasonably well for me, but I don't think it's got anything to do with AltFi. You have left out VPC Specialty Lending Investments PLC, which I am also in - but rather regret! Ouch, I see what you mean. Its hard to know if this is due to poor lending decisions, FX movements, Brexit or their fees! But it sums up why forumites are more willing to make lending and platform decisions themselves. We are "sick of experts" (?) who perhaps aren't that much better informed... Kevin.
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Post by WestonKevTMP on Mar 29, 2017 22:17:47 GMT
But in fairness, looking at the first on the list - Fair Oaks Income Fund LSE:FAIR is up 39% last 12 months, although this may have more to do with being valued in USD.
So performance is very volatile across funds/trusts, and it will be difficult to make an informed decision based on the lending that they do and currency risks.
Kevin.
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Post by WestonKevTMP on Mar 29, 2017 22:11:18 GMT
Can you invest in these through a S&S ISA? If they are listed on LSE or AIM, then yes. I haven't investigated all of them. But for example I hold both the Ground Rent Income and P2P Global Investment in an ISA. The Funding Circle Income Fund ticket symbol is LSE:FCIF, and the share price has risen from 96p to 102p in the last 12-moths. But again, depending on fund dividends this doesn't beat investing directly on the platform. Kevin.
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Post by WestonKevTMP on Mar 29, 2017 20:32:14 GMT
Comrades,
I'm sitting on a discussion table at Thursday's AltFi.com conference. The subject of the discussion is “Defining the universe: where does online lending sit within the broader alternative credit spectrum? ”. And I'd like to get your feedback...
Catchy title I know, but the jist is that they are interested to know (within lenders who are already within the P2P lending environment, i.e. you chaps), how many are lending in an alternative asset within this alternative asset! This isn't just the higher risk platforms, but has anyone moved onto Alternative Credit investment trusts within the listed universe. For example;
- Fair Oaks Income (CLOs)
- Blackstone GSO Loan Financing (CLOs)
- Carador Income (CLOs)
- Volta Finance (CLOs)
- P2P Global Investments (Online Lending)
- Funding Circle SME Income (Online Lending)
- PC Speciality Lending (Online Lending)
- Honey Comb (Online Lending)
- GLI Finance Ltd (Investment and Direct Lending)
- SME Loan Fund (Online Lending)
- SQN Asset Finance Income (Direct Lending)
- RM Secured Direct Lending (Direct Lending)
- Ranger Direct Lending (Direct Lending)
- Hadrian's Wall Secured Investments (Direct Lending)
- GCP Asset Backed Income (Direct Lending)
- Toro (ABS)
- TwentyFourIncome (ABS)
- UK Mortagages (ABS)
- Alcentra Euro Floating Rate (Leveraged Loans)
- NB Global Floating Rate Note (Leveraged Loans)
- Axiom European Financial Debt (Other Credit)
- Chenavari Capital Solutions (Other Credit)
- CVC Credit Partners Euro Opps (Other Credit)
- Ground Rents Income (Property Debt)
- ICG Longbow UK Property Debt (Property Debt)
- Real Estate Credit Investments (Property Debt)
- Starwood Euro Real Estate Finance (Property Debt)
- TOC Property Backed Lending Trust (Property Debt)
- Amedeo Air Four Plus (Aviation Leasing)
- Doric Nimrod Air One (Aviation Leasing)
- Doric Nimrod Air Two (Aviation Leasing)
- Biopharma Credit (Biotech Debt)
My view is that most retail lenders, even the more informed early adopters and adventurous types (i.e. you guys/ladies) have not used these trusts extensively. Except perhaps P2P Global Investments and Funding Circle SME Income (I personally like the Ground Rents Income equity). And this has probably been a good choice, as the share price of some of these trusts has under performed direct lender returns by lenders on platforms directly. For example GLI Finance Ltd has dropped from share price has dropped from 32p to 19p in 12 months (having just announced a £16.5m loss) and LSE:P2P has dropped from 871p to 768p today (ignoring dividends).
If you are adventurous enough to have found P2P and invested on a few platforms, you probably prefer this to using an intermediary trust. Perhaps the suspicion that you can lend as well as them, without paying the middle man costs....
Any thoughts?
Kevin.
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Post by WestonKevTMP on Mar 28, 2017 19:48:06 GMT
It is worth remembering though that ratesetter have a great track record although this doesn't guarantee the future. Why thank you, I think I did a good job! Although I'm not there now obviously, and RateSetter is a bigger beast now lending consumer (my expertise) but also SME and property. These are chunkier and so a certain amount of statistical luck comes into play. I think liquidity risk would hit before any provision fund issue, although I may be wrong again. Liquidity is a big risk to P2P platforms. There might not be able to have a " run on the bank" as people are tied in. However if new lenders are not forthcoming they can't match new loans and will not be able to charge the up-front fees that allow them to cover operational costs. Having said that, the platforms that have switched to loans under management fees will survive for much longer, and that includes RateSetter. Their income is not dependent on writing new loans (for a short-medium period at least), and so is quite robust from liquidity risk. Other platforms less so.
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Post by WestonKevTMP on Mar 20, 2017 18:54:47 GMT
This is true for lenders but is is true for borrowers? Do they pay any upfront fees? Well, it won't have been a 5 day loan for the borrower... It would have been 5 days in the end, but wouldn't have been planned to be so short at the start. It would have been paid pack early in cooling period (commonish, especially if rates are high) or cancelled for whatever reason (rare). Despite what some conspiracy crazies might think, your money never gets swapped with cheaper money within a live existing loan. Kevin.
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Post by WestonKevTMP on Mar 20, 2017 18:50:35 GMT
If you are suggesting it was probably a second-hand loan I would agree. Or do you have in mind something more underhand? No, exactly that. RS don't write 1yr loans. Yes they do, property development loans.
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Post by WestonKevTMP on Mar 13, 2017 8:03:57 GMT
I think looking only at default data it is impossible at this stage to determine portfolio performance on +
This is because Zopa don't default until at least 90 days, as typical policy. Looking at the data on "lates" from their downloadable loan book it can take longer, probably if they are in positive dialogue with the customer. And also, unless a loan is a fraud or first payment non-payment default, most customers make some payments before their position deteriorates.
So anyone that only started lending on + from Q3 2016 will have no idea of performance unless you take you late's and estimate that there will be a capital loss on a % of these. From my experience, the 6 to 18 month window is where we'll see the true estimate of final bad debt performance.
All of this will make the performance of + look far better than the long term reality at the start. We're not really going to know for another 6-months. And by then, Zopa could have changed their allocation or risk policy, so this performance may not be reflective of future. If you were being cynical you might think it would be in Zopa's interest to make sure this initial performance meets lenders expectations...
Kevin.
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Post by WestonKevTMP on Mar 7, 2017 6:41:52 GMT
It's taken one week from the initial phone call to complete the fee free sell out. I had over 400k over all the markets which is now sitting in my holding account, apart from one 5 year contract (£7.50) which is running its course. I'm happy to keep the lot in the rolling market when it get's better or to pull the lot as and when I choose. I hope! Wow. Although I'm disappointed you've withdrawn your money, as RateSetter have to date always delivered. It does have to be said that the platform's liquidity is very strong. Despite making this generous offer and many forumites taking advantage (oh you disloyal, fickle, impudent bunch! #EveryPenny), you have to admire the platform's resilience. Future failure of smaller platforms will not be a direct result of bad debt, although it could be a catalyst. It all be liquidity risk of not having the funds to make loans and hence a lack of revenue. This process has proven the strength of RateSetter's liquidity and should be very reassuring to its lender customers left. Kevin.
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Post by WestonKevTMP on Mar 4, 2017 8:42:28 GMT
I think the S***** N*** & J****** is trying to run them out of town...
At least we know how they are going to refinance, through a crowd funding campaign from 1,000 partners to "donate" £5,000 each. Good luck with that.
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