bigfoot12
Member of DD Central
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Post by bigfoot12 on Aug 4, 2014 9:52:56 GMT
Different lenders and borrowers have different requirements. RS seem to do just fine offering 6.5% downwards with no crowd DD or opportunity to manage your risk. We're settling into a level higher than that with plans to broaden the range of rates offered on our loans both up and down. I am a big fan of AC and looking forward to your upcoming developments. I expect to increase the amount I have with AC in the next six months, especially if the variety of loans you hint at appears, but I can't leave your comment about RS without responding. Time will tell the strength of the AC documentation; it is being tested for the first time now. Similarly we can't be sure about the strength of the Provision Fund; maybe it isn't big enough for the next downturn. RS does have the advantage that for a taxpayer there is no tax to pay on loss making loans. Assuming a high rate taxpayer with little use for capital losses then the net rate closes quite quickly for relatively modest AC losses. I don't expect that AC will suffer losses equivalent to an annualised 2%, but add in draw-down delays and these rates might not be that far apart.
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Post by chris on Aug 4, 2014 10:07:18 GMT
Different lenders and borrowers have different requirements. RS seem to do just fine offering 6.5% downwards with no crowd DD or opportunity to manage your risk. We're settling into a level higher than that with plans to broaden the range of rates offered on our loans both up and down. I am a big fan of AC and looking forward to your upcoming developments. I expect to increase the amount I have with AC in the next six months, especially if the variety of loans you hint at appears, but I can't leave your comment about RS without responding. Time will tell the strength of the AC documentation; it is being tested for the first time now. Similarly we can't be sure about the strength of the Provision Fund; maybe it isn't big enough for the next downturn. RS does have the advantage that for a taxpayer there is no tax to pay on loss making loans. Assuming a high rate taxpayer with little use for capital losses then the net rate closes quite quickly for relatively modest AC losses. I don't expect that AC will suffer losses equivalent to an annualised 2%, but add in draw-down delays and these rates might not be that far apart. All I can say for now is we're aware of our relative strengths and weaknesses and have a plan. There's a very big discussion to be had around provision funds vs asset security, the strengths and weaknesses of each approach, relevant levels of cover, even tax and legal ramifications. Our marketing agency is being briefed.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Aug 4, 2014 10:17:23 GMT
Chris as you must know I have been a very strong supporter of Assetz almost since launch and have gone out of my way to push your business in the public domain. However this was at a time when you used to advertise that you were paying an average return of 12% or better. Now my guess is you are well below 10% on average and seem to have an intention to head further south.
Before I began cautiously investing in Assetz most of my personal wealth was in property and shares with some direct investment in businesses. Property was producing a net average rental return of about 8% but added to this was capital growth which was averaging around 10% (2007 to 2013 SE England). Shares where a mixed bag with dividends producing around 4% + a tax credit and capital growth across the same period producing about 2% on average. My direct investments in business averaged around 5% as they were long term and based on bank rate +. Money I had in the building societies or bonds were at such a pathetic low rate it was just a joke. All of my investments had some risks attached although I enjoyed the challenge of managing them. So I started to dabble with P2P. First I tried FC but got fed-up with their prevarication and many issues around failing businesses. Then Assetz appeared on the scene offering 12%+ with security. So it was a no brainer to move some spare cash to you. However as at a young age I was taught to be cautious with investments I kept it to a small to medium sized five figure sum. The main problems for me has been tax and defaults. I am a higher rate tax payer and there is not much I can do about that but defaults are another issue. With FC I hit a bad patch of defaults which left me with a dividend of about 1% after tax in the tax year 2012/13. So even with the additional protection that Assetz is providing, I cannot be certain that defaults wont occur in due course so I budget accordingly. Put simply,to get a reasonable return I need more that single figure rates.
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niceguy37
Member of DD Central
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Post by niceguy37 on Aug 4, 2014 10:27:46 GMT
Different lenders and borrowers have different requirements. RS seem to do just fine offering 6.5% downwards with no crowd DD or opportunity to manage your risk. We're settling into a level higher than that with plans to broaden the range of rates offered on our loans both up and down. I am a big fan of AC and looking forward to your upcoming developments. I expect to increase the amount I have with AC in the next six months, especially if the variety of loans you hint at appears, but I can't leave your comment about RS without responding. Time will tell the strength of the AC documentation; it is being tested for the first time now. Similarly we can't be sure about the strength of the Provision Fund; maybe it isn't big enough for the next downturn. RS does have the advantage that for a taxpayer there is no tax to pay on loss making loans. Assuming a high rate taxpayer with little use for capital losses then the net rate closes quite quickly for relatively modest AC losses. I don't expect that AC will suffer losses equivalent to an annualised 2%, but add in draw-down delays and these rates might not be that far apart. I too think that AC has a lot going for it, and am expanding my investment. I realise that AC may consider themselves to be in a different market niche to RS, but I do think that the best possible improvement that AC could make for me (and themselves) is a provision fund. The tax advantages are clear, especially for higher rate tax payers. Perhaps in time the government will level the playing field and allow us to net off losses against interest as the bank do, or perhaps this might become possible when P2P/P2B investments are allowable for ISAs, but until then a provision fund would be a major improvement. A provision fund might be optional, funded by a set percentage of interest (e.g. 10% of the loan interest rate), or set by AC on a loan by loan basis. The provision fund levy would be netted off interest payments to lenders by AC, thereby reducing our tax liability. I expect that allowing ISA investment in P2P may bring a flood of money and new investors to the market, and a provision fund will be a major incentive to new, and perhaps slightly more cautious, investors.
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mikes1531
Member of DD Central
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Post by mikes1531 on Aug 26, 2014 14:02:46 GMT
ZOPA looks just like a trendy building society already these days. I'd say Zopa looks just like a bank these days -- building societies don't have investors/shareholders wanting a return on their investments, while banks and Zopa do.
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gnasher
Member of DD Central
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Post by gnasher on Aug 26, 2014 18:33:50 GMT
I am also very happy with AC, I do wonder where the underwriting is heading but for now I am still happy. Generally I buy into the large loans with huge underwriting positions with the intention of holding full term and knowing that I may have little choice.
However the ability to sell at a discount for a quick sale is interesting, but how do you buy at a discount? I have never seen units on sale at a discount, is there an option to sort them to the top? If not how the hell do you find them without going through 291 pages (as is the case currently for the care home). If you purchase with auto invest and there are units at a discount available, will it purchase them for you or will you get the full price ones?
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Post by mrclondon on Aug 26, 2014 19:12:01 GMT
I am also very happy with AC, I do wonder where the underwriting is heading but for now I am still happy. Generally I buy into the large loans with huge underwriting positions with the intention of holding full term and knowing that I may have little choice. However the ability to sell at a discount for a quick sale is interesting, but how do you buy at a discount? I have never seen units on sale at a discount, is there an option to sort them to the top? If not how the hell do you find them without going through 291 pages (as is the case currently for the care home). If you purchase with auto invest and there are units at a discount available, will it purchase them for you or will you get the full price ones? If you fill in the amount you want to puchase in the "amount to buy" box, it will select the units with the biggest discount that are listed (as will auto invest). Try it with North Lothian - enter £100 and it will tell you you have "1 unit selected totalling £99.50" ( which is the -0.5% discount one underwriter frequently uses), now try £10,000 and it will tell you "100 units selected totalling £9,950.00". This amount to buy box is also very useful for identifying parts smaller than £100 to buy with the accumulating repayments. Over the last month I have sold 4 figure sums in several very large loans (Ipswich, Epping, Midlands Trade, and West Lancs Care) normally within a few days by offering them at a very modest discount. EDIT: Crossed post with pepperpot who has been the source of many of the smaller loan parts I have purchased with repayments. 
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pikestaff
Member of DD Central
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Post by pikestaff on Aug 26, 2014 19:40:51 GMT
Just so that I understand. Autoinvest has never bought me a discounted loan part - including North Lothian where it bought me some very recently at par. Do I have to go the manual route if I want to buy at a discount?
Not that it matters much for the sake of 0.5%...
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Post by mrclondon on Aug 26, 2014 20:36:12 GMT
Just so that I understand. Autoinvest has never bought me a discounted loan part - including North Lothian where it bought me some very recently at par. Do I have to go the manual route if I want to buy at a discount? Not that it matters much for the sake of 0.5%... If it has bought £100 parts in North Lothian at full price since about 7th August then it might be a bug in AI. Smaller parts norrmally change hands at par.
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Post by chris on Aug 26, 2014 21:05:23 GMT
To clarify the algorithm, it will only buy at a discount if there are loan parts available that match the size of investment you're after. If someone has a £100 loan unit on sale with a 1% discount and someone else has a £50 loan unit for sale with no discount, if you ask the system to buy £75 then it will pick the £50. If you ask for £125 then it would take the £100. If it were the £50 loan unit that was discounted and you asked for £100 then it would buy the £50 one.
The new platform simplifies this to a degree as it's able to break apart loan units, so it can always hoover up the most heavily discounted units first.
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mikes1531
Member of DD Central
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Post by mikes1531 on Aug 26, 2014 21:51:56 GMT
Just so that I understand. Autoinvest has never bought me a discounted loan part - including North Lothian where it bought me some very recently at par. Do I have to go the manual route if I want to buy at a discount? To clarify the algorithm, it will only buy at a discount if there are loan parts available that match the size of investment you're after. If someone has a £100 loan unit on sale with a 1% discount and someone else has a £50 loan unit for sale with no discount, if you ask the system to buy £75 then it will pick the £50. If you ask for £125 then it would take the £100. If it were the £50 loan unit that was discounted and you asked for £100 then it would buy the £50 one. Thanks for the input, chris. If that's how the AI algorithm works, then why would pikestaff have bought some North Lothian units at par when discounted units have been available? Or am I misremembering in thinking that NL units have been available at a discount for quite a while? Or perhaps it's because pikestaff has been buying only sub-£100 units and there have been none of those on offer at a discount? For that, we need to hear from pikestaff again.
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Post by chris on Aug 26, 2014 21:55:26 GMT
I'd need more detail from pikestaff to be able to investigate it, if he feels it hasn't behaved itself. I don't know his account details so can't provide more insight.
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pikestaff
Member of DD Central
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Post by pikestaff on Aug 27, 2014 7:08:31 GMT
Relax, mix up on my part. Senior moment.
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gnasher
Member of DD Central
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Post by gnasher on Aug 27, 2014 9:29:28 GMT
Thanks all, now I get it. Looking at my statement with a bit more care, and furnished with the extra understanding that I now have, I see that auto invest has indeed purchased a few units for me at a discount. Once again I am impressed with the AC system.
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