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Post by chris on Apr 17, 2018 21:06:39 GMT
fyi I have a mid 4-figure sum in GBBA2 and my #441 is at 5.06%. Edit: and it's the largest holding by percentage. Can I interest you in a swap for some more? Still unmoved on 33%! Ludicrous. Have you contacted customer services with your specific account details so that they can log the issue and have it investigated?
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Post by Deleted on Apr 17, 2018 21:24:39 GMT
Can I interest you in a swap for some more? Still unmoved on 33%! Ludicrous. Have you contacted customer services with your specific account details so that they can log the issue and have it investigated? , I contacted live chat as I just wanted to know if I need to wait longer for the process to take effect or if there is an issue that is leaving me with 33% in one loan. I was simply told they could not tell me what effect the algorithm would have and when. I was told my comments would be logged as feedback when I suggested I'd withdraw if there was no change.
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Post by chris on Apr 17, 2018 21:48:02 GMT
jester - if you PM me your email address I'll take a more detailed look at your account tomorrow.
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cb25
Posts: 3,528 
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Post by cb25 on Apr 17, 2018 22:24:05 GMT
Have you contacted customer services with your specific account details so that they can log the issue and have it investigated? , I contacted live chat as I just wanted to know if I need to wait longer for the process to take effect or if there is an issue that is leaving me with 33% in one loan. I was simply told they could not tell me what effect the algorithm would have and when. I was told my comments would be logged as feedback when I suggested I'd withdraw if there was no change. I think the (mis-)allocation of loans is a major flaw with the packaged accounts such as GBBA2. When money is put into such an account the lender has absolutely no idea what the highest percentage allocation will be. Only remedy if it turns out to be too high (e.g. 33%) is to start selling out the whole account. Simply not good enough. AC will no doubt say the lack of diversification is due to the relatively small number of loans they've made. True enough, but that's their choice, making relatively few loans, but often for literally £millions. That reduces diversification and increases the risk of a single massive loan going belly up.
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ceejay
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Post by ceejay on Apr 18, 2018 7:12:13 GMT
chris , I contacted live chat as I just wanted to know if I need to wait longer for the process to take effect or if there is an issue that is leaving me with 33% in one loan. I was simply told they could not tell me what effect the algorithm would have and when. I was told my comments would be logged as feedback when I suggested I'd withdraw if there was no change. I think the (mis-)allocation of loans is a major flaw with the packaged accounts such as GBBA2. When money is put into such an account the lender has absolutely no idea what the highest percentage allocation will be. Only remedy if it turns out to be too high (e.g. 33%) is to start selling out the whole account. Simply not good enough. AC will no doubt say the lack of diversification is due to the relatively small number of loans they've made. True enough, but that's their choice, making relatively few loans, but often for literally £millions. That reduces diversification and increases the risk of a single massive loan going belly up. I think that "(mis-)allocation of loans is a major flaw with the packaged accounts such as GBBA2" is a sweeping (mis-)statement, implying that it is an inherent flaw in the concept, which is nonsense. AC know that they have issues with initial allocation and have told us they are working on that. They also told us that they'd implemented an after-the-event redistribution algorithm. As it happens, I had a go with GBBA2 after this was launched: as expected, the initial distribution wasn't great but after a few days it was a lot better. I can't now remember the exact figures but there was certainly nothing over 10%. I sold out for other reasons, but lack of diversification was not an issue. It seems that something is going wrong for Jester, and perhaps that AC Customer Services haven't been very helpful, which may be the real issue here.
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cb25
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Post by cb25 on Apr 18, 2018 8:51:50 GMT
On reflection, I shouldn't have said "(mis-)allocation" of loans, but simply because - unlike say FC, Zopa - AC won't say what their allocation routine is, so I can't say whether/not it's mis-allocating.
Regardless of how we describe the allocation routines, it's still true that when money is put into such an account the lender has absolutely no idea what the highest percentage allocation will be.
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Post by chris on Apr 18, 2018 14:29:35 GMT
On reflection, I shouldn't have said "(mis-)allocation" of loans, but simply because - unlike say FC, Zopa - AC won't say what their allocation routine is, so I can't say whether/not it's mis-allocating. Regardless of how we describe the allocation routines, it's still true that when money is put into such an account the lender has absolutely no idea what the highest percentage allocation will be. I believe that's still untrue, perhaps not from the percentage allocation point of view but certainly from fully understanding how your funds will be lent. You do not know how FC, Zopa, or RS's allocation algorithm works. You may have a notional idea of how it works in terms of the percentage it distributes into each loan on your behalf but not how it selects which loans to invest you into nor how they prioritise your funds vs those of other lenders and institutions. I don't think I've ever seen them publish that information and I have read plenty of comments over the years where lenders have believed that one algorithm or another was manipulating the market to their advantage or disadvantage. We've always been more open about how the allocations and algorithms work. For instance the current allocation routine is relatively simple in that it estimates the availability of loans on the aftermarket and divides your funds broadly equally between them. If there are 5 loans available it will try and allocate your 20% of your funds into each, if there are 100 then it'll try and allocate 1% into each. It adjusts those percentages based on predicted demand for loan units and for loan units it thinks will shortly become available, which can quite heavily skew the results but as we process each loan in turn it's important to trying to deploy funds as quickly as practical. It's then down to the open market to allocate the actual purchases and sales via the mechanisms I've previously laid out. The diversification algorithm then takes over and moves everyone's holdings towards the global average within that account, within certain constraints that try and minimise the number of trades. The other platforms can, for the most part, use simple allocations based upon future loan flow as their business models support that. We're having to be more sophisticated and look at current availability rather than future drawdowns, and whilst there are areas we can and have been improving upon the number of lenders complaining about the systems has been a very small percentage of those investing via them. We also provide lenders with alternative means to invest if they do not like the automated accounts. The other platforms mentioned do not. It is ultimately your choice to use each account as you see fit.
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Post by chris on Apr 18, 2018 15:12:43 GMT
I think the issue with this is that rather than the cash in our accounts being shared out evenly amongst the available loans, it's that the loans are spread out evenly amongst the accounts with available cash. From the viewpoint of the platform owners or the borrowers it's shared out evenly but from the viewpoint of lenders it's absolutely not. I regard this as a fairly fundamental and counter intuitive flaw with the automated accounts but then I'm prepared to put up with it for now and give AC the time to: a) Build up their loan origination to a level where it no longer matters and/or, b) to implement the custom auto accounts where *we* can all say "please lend £200 on every loan at 70% LTV or smaller". Until then, I'm just going to have to keep my fingers crossed for #441. At least AC's recovery team are better than most. I more or less agree - it's a trade off between diversification and time to deploy cash though. We've been averaging something like 20-25 loans per month (although that is climbing and expected to climb a lot this year). If you just stick 1% into each loan that matches your criteria, and that's something like 15 of those loans each month, then it's going to take six and a half months to deploy your funds. Our approach has been to get the funds deployed more quickly and then rediversify amongst the invested lenders to try and better balance the portfolio as a whole. The more loans the better though for any strategy and as the platform grows that's naturally improving diversification along with it.
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Post by Deleted on Apr 18, 2018 16:00:30 GMT
I think the (mis-)allocation of loans is a major flaw with the packaged accounts such as GBBA2. When money is put into such an account the lender has absolutely no idea what the highest percentage allocation will be. Only remedy if it turns out to be too high (e.g. 33%) is to start selling out the whole account. Simply not good enough. AC will no doubt say the lack of diversification is due to the relatively small number of loans they've made. True enough, but that's their choice, making relatively few loans, but often for literally £millions. That reduces diversification and increases the risk of a single massive loan going belly up. I think that "(mis-)allocation of loans is a major flaw with the packaged accounts such as GBBA2" is a sweeping (mis-)statement, implying that it is an inherent flaw in the concept, which is nonsense. AC know that they have issues with initial allocation and have told us they are working on that. They also told us that they'd implemented an after-the-event redistribution algorithm. As it happens, I had a go with GBBA2 after this was launched: as expected, the initial distribution wasn't great but after a few days it was a lot better. I can't now remember the exact figures but there was certainly nothing over 10%. I sold out for other reasons, but lack of diversification was not an issue. It seems that something is going wrong for Jester, and perhaps that AC Customer Services haven't been very helpful, which may be the real issue here. Never a truer word, appears I was falling foul of minimum exchanges as I've only got a test amount deposited. Live chat were indeed useless and simply suggested they couldn't say when and if further exchanges would take place. Huge credit where it's due though as chris has taken the case personally and altered the algorithm so I am now seeing exchanges, albeit I need many many more yet to feel comfortable. Impressive given I am a very small fish to have the issue resolved so quickly. Here's to the arrival of the algorithm which helps with diversification at the deposit stage.
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cb25
Posts: 3,528
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Post by cb25 on Apr 18, 2018 17:40:20 GMT
I think the issue with this is that rather than the cash in our accounts being shared out evenly amongst the available loans, it's that the loans are spread out evenly amongst the accounts with available cash. I don't think it's as simple as that. In my GBBA2 account -loan 550: size £6.2m, £295K available....I have £226 in the loan -loan 441: size £3.9m, £172K available....I have £282 in the loan i.e. I have a bigger amount in the smaller loan with the smaller amount available. Even if the amounts available were reversed when my GBBA2 first allocated, I would hope they'd have straightened up by now. I'm sure AC will be able to explain this. However, my point is that you can't tell in advance what sort of maximum percentage allocation you'll get to a loan. With £5500 stuck in loan 227 and no sign of any recovery plan yet, I'd prefer to know my biggest loan risk in advance. I also use the MLA, but that suffers from relatively few loans.
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Post by chris on Apr 19, 2018 6:36:31 GMT
cb25 - the obvious answer is that loan size is irrelevant to allocation. The account invests based upon availability not loan size and there are many variables that affect that, from the amount people want to sell to the amount of competition for those available loan units. I'm not even sure why the size of the loan as a whole is of relevance?
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Post by chris on Apr 19, 2018 7:28:09 GMT
cb25 - the obvious answer is that loan size is irrelevant to allocation. The account invests based upon availability not loan size and there are many variables that affect that, from the amount people want to sell to the amount of competition for those available loan units. I'm not even sure why the size of the loan as a whole is of relevance? (My bold) sigh. It’s because people are still trying to understand how their maximum exposure to a particular loan or borrower is going to be managed by the system. This is a pretty fundamental part of automated allocation on any p2p platform. I’m at a loss to understand why it’s so difficult to understand this. But that has nothing to do with the total size of a loan. Or are you saying that FC, for example, would allocate you £400 in a £1m loan but £200 in a £0.5m loan and that is the right approach? Surely the important metric is the allocation as a percentage of your total investment and not the size of the loan.
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Post by brightspark on Apr 19, 2018 7:39:17 GMT
I think the issue with this is that rather than the cash in our accounts being shared out evenly amongst the available loans, it's that the loans are spread out evenly amongst the accounts with available cash. I don't think it's as simple as that. In my GBBA2 account -loan 550: size £6.2m, £295K available....I have £226 in the loan -loan 441: size £3.9m, £172K available....I have £282 in the loan i.e. I have a bigger amount in the smaller loan with the smaller amount available. Even if the amounts available were reversed when my GBBA2 first allocated, I would hope they'd have straightened up by now. I'm sure AC will be able to explain this. However, my point is that you can't tell in advance what sort of maximum percentage allocation you'll get to a loan. With £5500 stuck in loan 227 and no sign of any recovery plan yet, I'd prefer to know my biggest loan risk in advance. I also use the MLA, but that suffers from relatively few loans. I would suggest you need to think very carefully about whether the BBA accounts are suitable investment vehicles. I invested a relatively small suck it and see amount into BBA1 when I first became an AC investor. The algorithm immediately invested a large aliquot into loan 227 and within days became distressed. I avoided the loan via MLIA. Loan 227 apparently originated via Royal Bank of Scotland. My experience suggests to me that BBA can act as a dumping ground for large problematic loans. My BBA account is now empty apart from loan 227. Others more optimistic await a new promised algorithm which it is hoped will avoid similar pitfalls. I am steering clear.
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edward
Member of DD Central
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Post by edward on Apr 19, 2018 7:41:36 GMT
If its based on availability, should I be concerned about a bias towards unpopular loans that MLIA owners are selling?
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Post by chris on Apr 19, 2018 7:53:07 GMT
If its based on availability, should I be concerned about a bias towards unpopular loans that MLIA owners are selling? Any market required a seller. If people in the MLA are acting on information provided by the platform then the loan would normally either be suspended or outside the mandate for the investment accounts. They will only buy loans that match the published mandate.
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