SteveT
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Post by SteveT on Apr 4, 2018 14:41:18 GMT
That simply means the total investment account has just under 10% in that loan, so you are now just as diversified as the total account. Anyone with a lower holding will see it rise towards this figure as the algorithm rebalances loans from other lenders with higher holdings.
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cb25
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Post by cb25 on Apr 4, 2018 14:46:16 GMT
The algorithm makes no sense at all to me.
Loan 441
- is slightly smaller than loan 495, yet I have over 17 times as much in 441 as in 495 in my GBBA2 account.
- is slightly smaller than loan 544, yet I have over 19 times as much in 441 as in 544 in my GBBA2 account.
Worst P2P allocation routine I know of.
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SteveT
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Post by SteveT on Apr 4, 2018 14:49:26 GMT
The algorithm makes no sense at all to me. Loan 441 is slightly smaller than loan 495, yet I have over 17 times as much in 441 as in 495 in my GBBA2 account. Worst allocation routine I know of. It’s not driven by the size of the loan. It’s the size of the GBBA’s holding that counts. Presumably the GBBA holds 17x more of 441 than it does of 495.
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cb25
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Post by cb25 on Apr 4, 2018 14:55:52 GMT
The algorithm makes no sense at all to me. Loan 441 is slightly smaller than loan 495, yet I have over 17 times as much in 441 as in 495 in my GBBA2 account. Worst allocation routine I know of. It’s not driven by the size of the loan. It’s the size of the GBBA’s holding that counts. Presumably the GBBA holds 17x more of 441 than it does of 495. Quite possibly, but end result is - you have no idea what percentage allocation you might end up with on a particular loan. As one of many who has a large percentage tied up in suspended loan 227 (GBBA1), I know all too well the perils of lack of diversification. Compare AC's model to FC (0.5% of portfolio size) or to Zopa (1% of new money), imo FC/Z are massively better. I know they don't have PFs, but I'm waiting to be convinced that AC use their PF in the way lenders expect. Hopefully, loan 227 won't be a test case because - if it is - at £6m that loan is going to cause them lots of trouble.
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cb25
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Post by cb25 on Apr 4, 2018 14:58:17 GMT
Is there a way to tell how much of AC's non-ISA loan book is in the MLA ?
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Post by chris on Apr 4, 2018 15:04:41 GMT
It’s not driven by the size of the loan. It’s the size of the GBBA’s holding that counts. Presumably the GBBA holds 17x more of 441 than it does of 495. Quite possibly, but end result is - you have no idea what percentage allocation you might end up with on a particular loan. As one of many who has a large percentage tied up in suspended loan 227 (GBBA1), I know all too well the perils of lack of diversification. Compare AC's model to FC (0.5% of portfolio size) or to Zopa (1% of new money), imo FC/Z are massively better. I know they don't have PFs, but I'm waiting to be convinced that AC use their PF in the way lenders expect. Hopefully, loan 227 won't be a test case because - if it is - at £6m that loan is going to cause them lots of trouble. Those platforms have a volume of loans coming through that allows for far simpler allocations. Clearly our model has its downside but there's a conscious choice between speed of deployment of funds and diversification, and as you say there is a PF in there as well. As the platform scales and gets more loans coming through the algorithm performs better as it has more loans it can diversify lenders into which all lenders, including those already invested, benefit from as unlike FC/Z we continue to diversify after you're invested.
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cb25
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Post by cb25 on Apr 4, 2018 15:09:17 GMT
Quite possibly, but end result is - you have no idea what percentage allocation you might end up with on a particular loan. As one of many who has a large percentage tied up in suspended loan 227 (GBBA1), I know all too well the perils of lack of diversification. Compare AC's model to FC (0.5% of portfolio size) or to Zopa (1% of new money), imo FC/Z are massively better. I know they don't have PFs, but I'm waiting to be convinced that AC use their PF in the way lenders expect. Hopefully, loan 227 won't be a test case because - if it is - at £6m that loan is going to cause them lots of trouble. .. unlike FC/Z we continue to diversify after you're invested. Accepted. Yet I'm still stuck with £5,500 in loan 227 (GBBA1), some horrendous percentage even originally (before GBBA1 was frozen). I have only myself to blame, coming to AC after being invested in FC and Z, I failed to read AC's T&Cs carefully enough to notice this whopper.
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dc848
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Post by dc848 on Apr 4, 2018 15:11:03 GMT
#227 - The next hot potato, judging from the number of queries in the Q&A for today...
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cb25
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Post by cb25 on Apr 4, 2018 15:16:41 GMT
#227 - The next hot potato, judging from the number of queries in the Q&A for today... Thanks, hadn't thought to check Q&A. Noticed this in one of AC's answers "Should lenders reject the borrowers proposal, then the borrower will be asked to provide an alternative proposal and it will be a decision of the borrower whether or not that includes formal insolvency" What !! - the borrower gets to decide on whether/not to go for insolvency ? Don't AC see themselves as having a role as 'honest broker' sitting between borrowers and lenders ? Why do the proposals only come from one side (the borrowers) ?
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coda
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Post by coda on Apr 4, 2018 16:45:50 GMT
I have also been burnt by 227. It would be great if AC could provide us with some control on the level of automatic diversification, for instance leaving to each investor the possibility to set the maximum amount that might be invested in each loan. Because of the 227 experience, I personally completely gave up on using this account. The same goes for the GEIA. In both accounts I ended up with 15-20% of my investments stuck in very few defaulted loans when I had to liquidate my whole portfolio.
In comparison, my MLIA was invested in more than 100 loans and I only ended up with a very negligible amount locked into defaults. Conclusion is the MLIA is still likely to pay more than the automatic account with very limited default rate if a high level of diversification is implemented. I would gladly give up the extra remuneration for an automatic account allowing me to control and achieve the diversification that I am comfortable with even if that may mean some cash drag at the outset.
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cb25
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Post by cb25 on Apr 4, 2018 16:52:07 GMT
coda I'm in a similar position, have largely moved out of GBBA2 (got a little in it, plus some in the PSA) and made efforts to build up my MLA, now up to 196 loans (though probably only 160-170 have significant amounts in, others just pennies)
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Apr 5, 2018 6:45:09 GMT
As the platform scales and gets more loans coming through the algorithm performs better as it has more loans it can diversify lenders into which all lenders, including those already invested, benefit from as unlike FC/Z we continue to diversify after you're invested. Selling parts of small holdings to buy more of large ones is not diversifying! 4th Apr 2018 at 22:51 Exchange loan unit in loan **************** Ltd (371) for loan *************** Limited (441) £13.54
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Post by chris on Apr 5, 2018 7:26:06 GMT
Selling parts of small holdings to buy more of large ones is not diversifying! 4th Apr 2018 at 22:51 Exchange loan unit in loan **************** Ltd (371) for loan *************** Limited (441) £13.54 We had two main ideas for the diversification algorithm - set it to sell out of all holdings larger than a certain percentage of your holdings (e.g. 1%) and buy into those below that target; or move all accounts towards the average holdings. The latter was chosen because it has more impact in the short term across more accounts, where the former would have quickly reached a point where many accounts were still heavily imbalanced but there were no more trades possible. As more funds are invested into the account the algorithm will move everyone towards better diversification, but that's going to take time, more loans, and more funds being invested.
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JamesFrance
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Port Grimaud 1974
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Post by JamesFrance on Apr 5, 2018 8:08:54 GMT
Chris thanks for the explanation, this way seems to increase the risk level and could upset all the investors in the account if there was a default of the big holding. This could be some new investor's only P2P investment.
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n
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Yet another Nick
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Post by n on Apr 5, 2018 8:26:20 GMT
At least everyone will be equally upset.  |
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