cb25
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Post by cb25 on Feb 23, 2018 11:02:15 GMT
This is very good news. What will be the default diversification level? From what I've read of the posts on other threads, I suspect there isn't a simple answer to that question - at least not like "0.5%" as you might expect in discussion about FC, where there are huge numbers of loans to play with. Here, I think, their aim is to tend towards having all investors in a given fund having the same distribution across the loans, subject to some constraints (minimum account size to be participating, minimum chunk to exchange, and bad loans). This means that if a given loan represents X% of the total fund, then your holding should also tend towards X%, no matter what the value of X. Also, don't forget that this is just the rebalancing bit - they have not yet implemented the separate change to how an initial investment is allocated. I emailed AC yesterday as I wasn't impressed with my GBBA2 exposure to loan 441 increasing from 2.8% to 7%. Response: "The new algorithm is designed to balance out all lenders holdings in a particular loan so that all lenders will have approximately the same holding in each loan in each account. In the case of O*** H*** G*** Ltd, the algorithm has balance holdings to around £400 per lender. This is an ongoing process and as new lenders add funds to account the holding will rebalance again." (EDIT: see response from chris below, it is NOT true that the algorithm balances to the same amount (in £s) per lender) The response from AC Customer Service above appears to differ from what chris said "The new algorithm only looks at existing loan units, even ignoring idle funds, and attempts to take your holdings and diversify in roughly the same distribution as the other lenders in that investment account. So if the account as a whole has 5% of all funds invested in a given loan then the system will try and move all lenders to have roughly that level of investment in that loan." (see p2pindependentforum.com/thread/11736/exchange-loan-unit)i.e. AC Customer Service say each lender gets the same amount, chris says each lender gets the same percentageAs each lender will have different amounts in their GBBA accounts, these aren't the same statement. Especially for a firm that's authorised by the FCA, I think AC staff should get their story straight.
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Post by chris on Feb 23, 2018 12:06:49 GMT
From what I've read of the posts on other threads, I suspect there isn't a simple answer to that question - at least not like "0.5%" as you might expect in discussion about FC, where there are huge numbers of loans to play with. Here, I think, their aim is to tend towards having all investors in a given fund having the same distribution across the loans, subject to some constraints (minimum account size to be participating, minimum chunk to exchange, and bad loans). This means that if a given loan represents X% of the total fund, then your holding should also tend towards X%, no matter what the value of X. Also, don't forget that this is just the rebalancing bit - they have not yet implemented the separate change to how an initial investment is allocated. I emailed AC yesterday as I wasn't impressed with my GBBA2 exposure to loan 441 increasing from 2.8% to 7%. Response: "The new algorithm is designed to balance out all lenders holdings in a particular loan so that all lenders will have approximately the same holding in each loan in each account. In the case of O*** H*** G*** Ltd, the algorithm has balance holdings to around £400 per lender. This is an ongoing process and as new lenders add funds to account the holding will rebalance again." The response from AC Customer Service above appears to differ from what chris said "The new algorithm only looks at existing loan units, even ignoring idle funds, and attempts to take your holdings and diversify in roughly the same distribution as the other lenders in that investment account. So if the account as a whole has 5% of all funds invested in a given loan then the system will try and move all lenders to have roughly that level of investment in that loan." (see p2pindependentforum.com/thread/11736/exchange-loan-unit)i.e. AC Customer Service say each lender gets the same amount, chris says each lender gets the same percentageAs each lender will have different amounts in their GBBA accounts, these aren't the same statement. Especially for a firm that's authorised by the FCA, I think AC staff should get their story straight. I can categorically state that my description is the accurate one, as I personally wrote that algorithm. The lender desk were briefed but sometimes things can get lost in translation so apologies for that. I'll make sure this is raised with them so that they release the correct information in the future.
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Post by chris on Feb 23, 2018 12:40:10 GMT
As I was happy with the system I've just made a change to allow for smaller adjustments. The system will now exchange loans if you're 0.5% above the average or 0.1% below, and the adjustment is £5 or more.
I'll keep it under review but it's likely to remain at those levels for a while.
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registerme
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Post by registerme on Feb 24, 2018 8:19:42 GMT
Well #441 still makes up 20.4% of my GBBA1 account.
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Post by chris on Feb 24, 2018 9:40:04 GMT
Well #441 still makes up 20.4% of my GBBA1 account. You threw me for a bit, don't you mean #544? #441 was 2.8% of your account when I checked so I didn't look further. Having now investigated more fully I've found an "optimisation" that was prematurely excluding some trades. I've made a change that should correct that and the system is working through the exchanges again.
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registerme
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Post by registerme on Feb 24, 2018 10:18:22 GMT
chris yeah, sorry, I meant #544 (the dangers of writing a post before enough caffeine has been consumed)..... Anyway, thank you for the fix, I'll report back in a day or two with the results as I see them.
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Post by vaelin on Feb 25, 2018 7:50:39 GMT
What percentage does #441 make up for everyone else? It has dropped to 10% in my account and has now stopped moving. That still seems quite high for me. I am not really comfortable holding 10% in a single loan. It must be higher than 0.5% above the average? I also have a number of loans at around 4%, so my account still seems heavily weighted towards a handful of loans. What percentages are #544 and #602 for you now registerme? They are 0.6% and 2.6% respectively for me. |
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happy
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Post by happy on Feb 25, 2018 8:23:53 GMT
What percentage does #441 make up for everyone else? It has dropped to 10% in my account and has now stopped moving. That still seems quite high for me. I am not really comfortable holding 10% in a single loan. It must be higher than 0.5% above the average? I also have a number of loans at around 4%, so my account still seems heavily weighted towards a handful of loans. What percentages are #544 and #602 for you now registerme ? They are 0.6% and 2.6% respectively for me. I think the answer here is this is still work in progress. My figures on the loans you highlight are very different: #441 - 1.8% #544 - almost 12% #602 - 0% yes, nothing I too have a bunch of loans with high holdings, 9 at over 3% holding and 2 at +10% (#495 & #544), ignoring suspended loans This is still a major improvement from where we were and overall diversification has certainly improved but it seems we have not yet reached the even distribution state hoped for and some unpredictable behavior seems to be happening. In my case my largest non-suspended holding is #544 at 12% and the system was actually exchanging loans yesterday giving me even more of #544. How can that be chris when I have 12% of my holding in #544 and vaelin has only 0.6%? Edit: system increased my holding in #544 by over 2.5% yesterday with loan exchanges!
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Post by stuartassetzcapital on Feb 25, 2018 9:39:39 GMT
There isn't a figure - its just as low as possible with the key drivers of number of loans available to the account mandate filter and also available in the marketplace and also whether any suspension of trading has caused some loans to be frozen at their current levels per investor within the investment account. So it is entirely possible that if the investment account has 100 loan holdings that in a perfect world this has reduced to a 1% holding per loan quite quickly but some of the above factors will definitely affect this. Bespoke mandates in the MLA (that we intend to introduce a bit later this year would have exactly the same issues as they will not be able to over-ride our secondary marketplace rules either - such as those governing trading in defaulted loans.
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daveb4
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Post by daveb4 on Feb 25, 2018 9:42:51 GMT
Not sure 441 is working well?
10% on both my portfolios today, end of last week was about 8%. Interesting thing is most other larger loans have reduced dramatically to about 5% (I had a number of loans between 7 & 10%). 441 does have £700k outstanding though which probably makes a difference.
Generally happy with new system so far.
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Post by chris on Feb 25, 2018 9:47:31 GMT
Not sure 441 is working well? 10% on both my portfolios today, end of last week was about 8%. Interesting thing is most other loans have reduced dramatically to about 5% (I had a number of loans between 7 & 10%). 441 does have £700k outstanding though which probably makes a difference. Generally happy with new system so far. The account as a whole is still arguably over invested in a few loans. There's a new algorithm coming in 8 - 10 weeks that will adjust how the system distributes funds between loans that will address this, but in general more loans are needed to reduce idle funds and give the system a fair chance of diversifying well across the board. I'm very happy with the part of the algorithm that carries out the adjustments to lender accounts, the finding and executing actual exchanges of loan units. The calculation that sits on top of that to work out the adjustments needed could still do with some fine tuning but is generally working well, and as more loans become available we can tweak that further. Thankfully those adjustments are now easy to make.
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Post by vaelin on Feb 25, 2018 10:43:11 GMT
Not sure 441 is working well? 10% on both my portfolios today, end of last week was about 8%. Interesting thing is most other loans have reduced dramatically to about 5% (I had a number of loans between 7 & 10%). 441 does have £700k outstanding though which probably makes a difference. Generally happy with new system so far. The account as a whole is still arguably over invested in a few loans. There's a new algorithm coming in 8 - 10 weeks that will adjust how the system distributes funds between loans that will address this, but in general more loans are needed to reduce idle funds and give the system a fair chance of diversifying well across the board. I'm very happy with the part of the algorithm that carries out the adjustments to lender accounts, the finding and executing actual exchanges of loan units. The calculation that sits on top of that to work out the adjustments needed could still do with some fine tuning but is generally working well, and as more loans become available we can tweak that further. Thankfully those adjustments are now easy to make. How is it that some of us have 10% or more in #441 whereas others have 1.8% in the same loan? I thought the algorithm aimed to move us all towards the account average within a tolerance of 0.5% above and 0.1% below?
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happy
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Post by happy on Feb 25, 2018 10:43:25 GMT
Not sure 441 is working well? 10% on both my portfolios today, end of last week was about 8%. Interesting thing is most other loans have reduced dramatically to about 5% (I had a number of loans between 7 & 10%). 441 does have £700k outstanding though which probably makes a difference. Generally happy with new system so far. The account as a whole is still arguably over invested in a few loans. There's a new algorithm coming in 8 - 10 weeks that will adjust how the system distributes funds between loans that will address this, but in general more loans are needed to reduce idle funds and give the system a fair chance of diversifying well across the board. I'm very happy with the part of the algorithm that carries out the adjustments to lender accounts, the finding and executing actual exchanges of loan units. The calculation that sits on top of that to work out the adjustments needed could still do with some fine tuning but is generally working well, and as more loans become available we can tweak that further. Thankfully those adjustments are now easy to make. But surely it cannot be correct that yesterday the new algorithm increased my holding in #544 by about 25%to make it my largest holding? How does this behaviour fit with your expectations of the new algoritm chris ? Personally I would not expect or want this to happen. My current GBBA holding is relatively small so it is not such a great issue but I am waiting until I am comfortable with how the new system behaves before potentially significantly increasing my automated account investment inside the IFISA. Right now I have to say I am not so sure as I would be happy with a 12% allocation in one loan particularly where the system is actively increasing what was already my second largest loan holding both in value and percentage holding to make it my largest. I would appreciate your thoughts on this. Next week is fine, enjoy the rest of your weekend. EDIT: just checked my GBBA archive data and on the 19th Feb, before the new diversification algorithm was released, I had less than 1% in ~#544. So it seems that my 12% holding has been acquired by the system since the change. vaelin, can you check again your holding in #544 and if you know how that has changed since the new algo kicked in, thanks.
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amphoria
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Post by amphoria on Feb 25, 2018 11:18:29 GMT
The account as a whole is still arguably over invested in a few loans. There's a new algorithm coming in 8 - 10 weeks that will adjust how the system distributes funds between loans that will address this, but in general more loans are needed to reduce idle funds and give the system a fair chance of diversifying well across the board. I'm very happy with the part of the algorithm that carries out the adjustments to lender accounts, the finding and executing actual exchanges of loan units. The calculation that sits on top of that to work out the adjustments needed could still do with some fine tuning but is generally working well, and as more loans become available we can tweak that further. Thankfully those adjustments are now easy to make. How is it that some of us have 10% or more in #441 whereas others have 1.8% in the same loan? I thought the algorithm aimed to move us all towards the account average within a tolerance of 0.5% above and 0.1% below? It is my understanding that the algorithm works by directly exchanging loan parts between 2 accounts and therefore loan parts have to be able to move in both directions for the exchange to take place. So to take #441 as an example where you have 10% and I have 2.3%. If we assume that you are overweight and I am underweight in this loan, then for the exchange to take place there has to be a loan where I am overweight and you are underweight. My biggest loan is suspended so that doesn't help. My next biggest loan is #544 where I have 9.6%. However, if you are also overweight in this loan, this also doesn't help. I could list my other large loans, but hopefully you can see that it is not impossible that there are no loans where I am overweight and you are underweight where the difference is greater than £5, and therefore the exchange of #441 can't happen. Where I am uncertain is whether the algorithm would allow the exchange to happen if I was more overweight than you in #544, but I am going to assume that this is not the case to keep the algorithm simple.
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Post by vaelin on Feb 25, 2018 11:49:20 GMT
The account as a whole is still arguably over invested in a few loans. There's a new algorithm coming in 8 - 10 weeks that will adjust how the system distributes funds between loans that will address this, but in general more loans are needed to reduce idle funds and give the system a fair chance of diversifying well across the board. I'm very happy with the part of the algorithm that carries out the adjustments to lender accounts, the finding and executing actual exchanges of loan units. The calculation that sits on top of that to work out the adjustments needed could still do with some fine tuning but is generally working well, and as more loans become available we can tweak that further. Thankfully those adjustments are now easy to make. But surely it cannot be correct that yesterday the new algorithm increased my holding in #544 by about 25%to make it my largest holding? How does this behaviour fit with your expectations of the new algoritm chris ? Personally I would not expect or want this to happen. My current GBBA holding is relatively small so it is not such a great issue but I am waiting until I am comfortable with how the new system behaves before potentially significantly increasing my automated account investment inside the IFISA. Right now I have to say I am not so sure as I would be happy with a 12% allocation in one loan particularly where the system is actively increasing what was already my second largest loan holding both in value and percentage holding to make it my largest. I would appreciate your thoughts on this. Next week is fine, enjoy the rest of your weekend. EDIT: just checked my GBBA archive data and on the 19th Feb, before the new diversification algorithm was released, I had less than 1% in ~#544. So it seems that my 12% holding has been acquired by the system since the change. vaelin , can you check again your holding in #544 and if you know how that has changed since the new algo kicked in, thanks. I was 100% loan #441 before the new algo was released, so the 0.66% I have now in #544 is an increase on 0%. The reason I was 100% #441 was that I had recently made a large investment into the GBBA, of which 2/3s went to that loan. I wanted out for obvious reasons, so I tried to withdraw. With so much of #441 being available on the secondary market, it was the only thing my account couldn't sell.
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