Post by blender on Jan 10, 2018 13:44:49 GMT
I can now give some comments on the change to the rates presentation, based on empirical evidence.
On Monday morning I sold my remaining property portfolio - very quickly - leaving about £8k cash.
At 12:30 Monday I started lending the cash using the balanced portfolio, hoping to get new loans on the pm.
I have added to the funds each morning, to keep it hungry and optimising the diversity. It has never reached 50% of funds lent.
It bought me 100 parts by 10:45 am today, that is 75 mins less than two days, and after 48 hours, or two working days, it had bought 110 parts. I think this is impressive, but I seem to remember that how much you get is related to the proportion of funds left. It has a long way to go.
Of those 100 loans, by number A+ to E, 26%,27%,25%,11%,7%,4%
82% are PM, 18% are SM.
When it comes to rates, this new portfolio is 10.4% to 10.5% gross, according to FC's compounded figure, and the Estimated Return is now flipping between 6.9% and 7% as it grows. So, say 6.95%.
This should be the mean, and so should be compared with FC's old 7.5% projected. New lenders will presumably have a similar experience to mine, and would notice that 6.95% is not 7.5%. The change to 7.2% will make that gap small enough to be easily explained away. The fact that the 7.2% is one standard deviation below the true comparison of 7.5% is going to be lost on the average punter. Of course, I may have been unfortunate with my allocation, but I do not think so.
So I would guess that the change in how the predicted rates are presented is there, as others have implied, to minimise that gap between expectation and actual - both figures from FC.
The 7.5% was based on some assumption about how many 'investors', aka suckers, would take the 'conservative' option, to allow others to take more from the 'balanced' option. That always seemed optimistic for the current base. But in the future we have the IFISA, currently available to a few, to be aimed at the 'saver' in the next FY (I guess). And many of those, FC might suppose, will be happy with the less risky 'conservative' option. So the 'balanced' return might rise, slowly. Also there is the option to alter the banding, or the distribution between whole and partial loans. So I think that they will run this for at least half of the year and then review. There is a flotation coming and the projections versus actual will be scrutinised.
That said, I am happy so far with my new portfolio overall. It is for the cash which currently needs to be pretty safe and very liquid, and may get moved into an ISA. 7% after tax will be ok, if it happens.