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Post by bengilbert on Jul 10, 2014 13:35:48 GMT
It seems to me there are 3 separate issues/types of loans that are sitting there in size: 1) Bridging loans with just a month or two left to run, which people may be listing just in case someone will buy it off them and relieve them of the risk of non-repayment after they've collected the interest for most of the loan's life 2) The L***n R***l loan which people have decided they don't like the look of 3) Big loans that drew down relatively recently
The loans in (3) have already sold down in reasonable size, current lenders might already more or less have their fill but they may look attractive to new lenders, so I would expect them to sell down further over the next few weeks.
When loans outside of these categories are listed, they seem to go relatively quickly, even when tens of thousands of pounds worth go on. If I'm right, the L***s C***l P***y and perhaps even Y***e L***e loans won't be about for too long.
Some people may be pausing to see what happens with the loans which currently have some question marks against them. The outcomes could lead to a repricing of risk, in either direction.
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Post by bengilbert on Jun 10, 2014 17:37:57 GMT
If my calculation is correct & one opts for full interest payment upfront (plus cashback) then invest that immediately @ 12% in another loan once received, then effective interest will be 14%. Would appreciate confirmation or otherwise on my calculation. That's what I get too. (1+[0.125*1.12] = 1.14)
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Post by bengilbert on Jun 2, 2014 19:00:55 GMT
This specific investment trust (it's clearly not a hedge fund though backed by one) implies it can offer dividends of 6-8% from a combination of platforms. I'm assuming this is net of fees (which seem to be a 1% management fee and 15% performance fee). So pre-fees they are looking to deliver at least 8%-10.5%. This seems rather high on face value given two of the platforms are RS and Zopa (which yield 4-6%) and it's not clear that FC delivers more net of defaults. I am assuming the fees they are paying to the platforms will be a fraction of what retail investors pay which may add 50bp. However, it seems that they are intending to use a very mild amount of leverage (I noticed they can leverage 1.5x NAV in the prospectus) to deliver these returns. I am sort of surprised about the performance fee of 15% since it's hard to argue on platforms such as RS and Zopa that the fund manager is adding 'alpha'. I wonder also if their investments on RS and/or Zopa will be on different terms to retail investors, in particular if they will have access to the protection funds. The prospectus says that they will be buying whole loans from both platforms according to agreements which have been made - perhaps the fund will be buying the loans without protection fund cover but also getting paid the additional interest that, on RS at least, is usually diverted to the provision fund.
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Post by bengilbert on May 2, 2014 16:18:38 GMT
Thanks a lot, webbski9.
I've been caught up in some other p2p-related things recently and so haven't had the time I would have liked to tweak the site. But I'll try to have something (perhaps a reduced version) running this month.
Appreciate you asking.
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Post by bengilbert on May 2, 2014 10:39:39 GMT
I think people might be talking about different things here. As I understand it, within p2p, 'underwriting' has 2 quite different meanings. It can mean just the process of investigating potential borrowers to decide whether they are creditworthy enough to list, or it can mean people committing to fund any part of a loan that remains unfunded at the end of the auction.
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Post by bengilbert on Apr 29, 2014 9:12:27 GMT
I think the question is - say I offer a part for sale today, and someone buys it in a week. Where does the interest for that week go? To me, to the buyer, or to Saving Stream?
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Post by bengilbert on Apr 18, 2014 12:01:14 GMT
chielamangus – I don't pretend to know what will happen to p2p. I came to p2p because I decided that some loans offered a really outstanding return relative to the risks, and one reason I see a strong future for p2p is simply that I believe other people will think along the same lines as I do. Also, I was very sceptical at first, which leads me to believe that there are other people who don't trust it now but who, with time, will come around to investing. If p2p sites can operate with lower costs than banks, I don't see why they shouldn't continue to offer lenders good returns, by giving them access to the types of deals that banks lend profitably on. I agree that, right now, the market isn't efficient. I think the rates at which deals go often don't reflect the risks on them. I also agree that, with time, a lot of people will work out that they aren't doing as well as they thought, and will stop lending, or change how they lend. This seems like a good thing to me – the market will become more efficient as people stop lending at rates that are too low. It's possible that some combination of events – rates rising, some p2p scandal, general loss of enthusiasm after people get lower returns than they expected – will lead to the number of lenders levelling off or falling. But I think that, in this case, other agents will get involved – institutional investors of some sort, most likely. I do agree that there are all sorts of inefficiencies in how things work at present, which might end up limiting the appeal of p2p, including the time costs you talk about. But I think that just creates space for innovation in developing products and services which reduce these costs. All this is assuming that p2p can offer good risk-adjusted returns. If it can't, then it has only a small niche future.
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Post by bengilbert on Apr 16, 2014 15:03:33 GMT
The interest rates shown on the secondary market are the interest rates you'll actually get (plus you get the whole month's interest at the next repayment, even if you only bought the unit the day before).
A 5% premium on the price will change the interest rate you get differently depending on how long is left on the loan - if there's only a short while left, it could push the effective interest rate right down, whereas if there's a long time left, it won't make such a big difference. But you don't need to work that out yourself, the site does it and shows the effective rate when you look at the units for sale.
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Post by bengilbert on Apr 14, 2014 15:23:44 GMT
james – here's a slightly more detailed response to your comments: Introductory graphics – I'm not sure which one you're writing about since I don't think any show a 12% / 1% split but I take your point that these figures will be very different on different sites. There are certainly sites where lenders receive a much lower % of the amount borrowers pay (possibly for entirely justified reasons, eg higher costs to the platform in sourcing and processing deals). Risk of losing money – I agree that platform risks should be more prominent and I have updated the wording to reflect this. (Originally, the 'should' was intended as a nod to this, but I agree it should be more explicit). I've also made the possibility of secondary market losses more explicit. Default rates – as I noted, the table shows total default losses to date, the annualized figure is therefore lower. I've made this clearer on the table. Safeguard Fund – you are quite right, the wording was misleading, since there are many lenders holding pre-Safeguard loans. I've updated this. Again, thanks a lot for pointing all those things out.
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Post by bengilbert on Apr 13, 2014 22:11:24 GMT
mikes1531 - thanks for the comments. The blue circles actually shouldn't be appearing - it depends on the web browser used, I'll take a look into it and try to get them removed from all browsers. On registration: at present you can leave a review without being registered but need to be registered to post in the forum. The user and registration system at present is undeveloped - things like a privacy policy, forum rules etc will be added before it is live. I agree it needs to be made clearer. james - I really appreciate the criticism and see your point of view on several of the points you make. I'll write in more detail tomorrow but, very briefly -I agree that it's worth being more precise in the wording on losses, and that it is possible to lose money through secondary market sales. I actually used wording that reflected this in an earlier version and changed it for simplicity, I will revise it to be more accurate. -I also agree that it's important to draw attention to platform risks. -The table on default rates gives figures for defaults over the total course of loans, thus the annual rate will be lower. -I will revise the wording about Safeguard to be more accurate. I genuinely appreciate this sort of close criticism - it is a great help in improving the accuracy of what is featured, so thanks for taking the time.
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Post by bengilbert on Apr 13, 2014 17:41:41 GMT
oldnick, jimbo, webwiz - thank you very much for the encouraging comments. It's very heartening to hear. Please don't hesitate to point out what you think could be improved, anything you think is unclear or misleading etc. I recognise that there's still a lot of work to do. webwiz - I've thought about the time it will take to maintain and I think it's manageable. I spend quite a lot of time anyway following what's going on in p2p, so it's just a matter of updating the relevant sections. If the site can get a decent number of visitors, it may become worth the while of some of the platforms to add content themselves. For example, something I personally would find useful is a list of deals drawn from several sites with very short introductions to each deal, so I know whether they're worth investigating in detail. The sites themselves might be able to add that sort of content. But I realise that at first I'll have to do it myself. Fair question about making money. I do hope the site can grow into a viable business. But I'm also fascinated and enthusiastic about p2p, so there's an element of pure interest for me. At first, I hope I can generate some income from referrals. I've got some ideas about how the business could further develop, but I'd like to find out what works and what doesn't in its present state first. If p2p grows as I expect it to, I think there's definitely space for an independent site that has something for people of all levels of experience, from newbies to experienced lenders. It's yet to be seen if I'm the person to do it, but I'm going to give it my best shot.
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Post by bengilbert on Apr 13, 2014 10:55:02 GMT
I'm getting ready to launch a p2p information / comparison site that I've been working on for a little while. It isn't live yet but I hope it will be in the next couple of weeks. If any of you would like to take a look, the trial version is up at www.lendgrade.com. Some parts are out of date right now but once it's live, I intend to keep it updated on a daily basis. I'd be very, very grateful for any feedback any of you have about the concept or the content. You can write here or send me a PM.
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Post by bengilbert on Apr 11, 2014 12:49:04 GMT
Or we could always open a book on the drawdown date for each deal and let the Assetz team wager on the over/under!
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Post by bengilbert on Apr 11, 2014 12:27:49 GMT
I would much rather see quick drawdowns with proper due diligence & documentation than slow drawdowns or loans being cancelled, but I would also much rather have slow drawdowns and cancellations instead of loans where something wasn't done right. For me, the strongest selling point for Assetz is the sense that security really is the priority and the loans are drawn up in a way that maximises the chance of recovering money if something goes wrong. I'm willing to wait longer for drawdown if that's what it takes to get the documentation right.
I do think Assetz could do a better job of communicating progress. It's not so much the having to wait as the uncertainty that bothers me - being given estimated drawdown dates that keep being put back, etc. I'm not sure though what can be done about this. It would be great to be copied in somehow to the exchanges you have with the lawyers but I can see that isn't practical. Any other suggestions?
I also back the idea of having a single page where all updates to drawdown progress/estimates on the loans in limbo are posted, rather than having to look at the Q&As for each individual deal.
Overall, though, I don't want Assetz to compromise the slightest bit on getting the security right, and I'm willing to wait if that's what it takes.
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Post by bengilbert on Apr 2, 2014 18:39:11 GMT
Going by the way they've done things in the past, I would be very surprised indeed if anyone who bid yesterday will be excluded from the promotion. They might net off aftermarket sales in the way the new terms spell out, but I'm pretty sure they'll honour the cashback offer for new money that went on yesterday.
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