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Post by portlandbill on May 21, 2018 12:15:33 GMT
I'm just beginning to get a little concerned about the burgeoning watch and recovery lists. Mine now totals just over 2 x my all time interest earnings.
Together with the updates which appear (I hope to be wrong) to be the same repeated comments but just marked as "(insert current month here) 2018".
Anyone else share my concerns or am I worrying unnecessarily?
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zlb
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Post by zlb on May 21, 2018 14:57:58 GMT
I share your concerns. Main problem, I think, is the diversification by percentage and not a set maximum value. Can't imagine they'd want to be individual choosing and setting up loans for £10 for all investors though.
Recovery seems to require a longish wait, in order to prove the viability of the platform, as with many platforms now.
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Post by stevefindlay on May 22, 2018 19:20:56 GMT
We've not seen any degredation in the quality of the loan book. We are faster than most to tag a loan in recovery, and have seen very few losses in those loans (less than 0.3%).
We have tagged all Collateral loans as Recovery, but anticipate that there should be full recovery in all of our loans there based on the condition of the underlying borrowers.
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wilja
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Post by wilja on May 22, 2018 20:32:51 GMT
I have zero in the write off box, and the risk posed by watch and recover is reflective of all the platforms I invest in. I am sure that Bondmason invest in the same platforms that I manually invest in and more. I am testing to see if it’s worth all my manual effort or should I put it all in BondMason or similar platforms.
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ton27
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Post by ton27 on May 23, 2018 12:27:53 GMT
I have had a w/off of about 5% of my cumulative interest.
My Watchlist is 175% of CumInt or 12% of my total investment and Recovery is 105% of CumInt or nearly 7% of my total investment.
I am not sure if this is the same or similar to my other P2P investments but still will invest no more until I have some indication of recoveries. Steve has stated that only a small amount has been written off to date so am hopeful that this continues to be the case.
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Greenwood2
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Post by Greenwood2 on May 23, 2018 13:28:08 GMT
I had one write off last financial year. Only two month into this financial year I have two write offs already, both more than twice the size of the one last year due to inability to diversify as much as I would like. Seriously thinking about selling off.
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TheDriver
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Post by TheDriver on May 23, 2018 19:29:51 GMT
My philosophy about diversity aligns with BM; I believe that with good DD it is better to double-dip on the top half of loans than buy a bit of everything. If a greater proportion of the lower-quality ones fail, that will give a worse outcome!
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Greenwood2
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Post by Greenwood2 on May 23, 2018 19:37:05 GMT
There are not meant to be lower quality loans on BM, only the best platforms and hand picked loans with expert DD. So I am very disappointed with two defaults already this year and for amounts I am not happy with.
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TheDriver
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Post by TheDriver on May 23, 2018 20:29:34 GMT
@greenwood2;
Fair enough, and I can empathise with your disappointment regarding losses, but do you not think that if you had half as much in twice as many similar quality loans there would tend to be an equivalent value of defaults?
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yangmills
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Post by yangmills on May 23, 2018 20:46:27 GMT
My portfolio continues to deteriorate. After 22 months on the platform (deposits occurring between 1-Aug-16 and 1-Feb-17 and totalling £15k, 1% setting) my statistics are:
IRR to date: 5.82%
Interest earned: £1419 (9.5% of notional investment)
Loans written of : £230 (1.4% of notional investment). Recovery rate 6.5%.
Loans in default: £1550 (10.3% of notional investment)
Loans on watchlist: £1780 (11.9% of notional investment)
So IRR is up from around 1 year ago by around 50bp BUT total loans written-off/default/watchlist has jumped hugely to 23.6% of notional investment or 250% of interest earned (albeit looking at default metrics as a % of interest is meaningless). Assuming I lose 10% of the principal on the loans on my default/watch-list, my IRR falls to 4.48%, a 30% haircut 1.74%, and a 50% haircut -1.00%. Still hard to see a negative return outcome but also increasingly hard to see a return above 4.5%.
I don't really see the impact of the "expertise" in the actual return number and, if anything, the 1.5% management fee is just a NAV drag. The fact they invested on Collateral is also a concern since my background checks threw up some possible red flags but clearly theirs did not. I was going to give it two full years but I'm going to exit since the experiment has failed in my view.
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Greenwood2
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Post by Greenwood2 on May 24, 2018 6:51:27 GMT
@greenwood2; Fair enough, and I can empathise with your disappointment regarding losses, but do you not think that if you had half as much in twice as many similar quality loans there would tend to be an equivalent value of defaults? My defaults are running at a higher rate than Steve's quoted figures for the platform, so I would definitely be better off if I were invested in every loan. Usually the higher your diversification the closer your defaults should be to the platform average defaults. The lower the diversification the more luck is involved, I seem to be in the bad luck camp.  If you can lose up to 1% or 2% of your investment on each default you really can't afford many defaults in a year if you are to get anywhere near the projected return, having two already does not bode well. I agree with yangmills about Col. Although I dabbled in Col, I was not that confident in them and was very surprised to find BondMason was using them.
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zlb
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Post by zlb on May 24, 2018 17:16:29 GMT
The question that comes to mind for me is what kind of loans are the significant portion in BM that aren't p2p? Are they more or less the same risk, ie borrowers are the same bracket of some kind or another, or are they different?
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mary
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Post by mary on May 24, 2018 18:15:27 GMT
The question that comes to mind for me is what kind of loans are the significant portion in BM that aren't p2p? Are they more or less the same risk, ie borrowers are the same bracket of some kind or another, or are they different? The whole design of BM is "trust me, we know best". Clearly, that they were exposed to COL, shows at least some issues with their expertise. However, I was initially more concerned with their lack of transparency...see... www.4thway.co.uk/guides/the-peer-to-peer-lending-fraud-checklist/The specific flag being...
- Claims of being expert while being highly intransparent about the key people making decisions and the processes they use.
I have avoided BM for this reason, but as BM returns are also seemingly low, with high charges, that is also an even more compelling reason to avoid for me. Ponzi schemes usually seem to offer higher than average returns in order to lure the unsuspecting, therefore I am of the opinion that BM is likely on the level, but that their secret sauce (expertise) is just not as good as they think it is.
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Post by stevefindlay on May 24, 2018 21:45:31 GMT
My portfolio continues to deteriorate. After 22 months on the platform (deposits occurring between 1-Aug-16 and 1-Feb-17 and totalling £15k, 1% setting) my statistics are: IRR to date: 5.82% Interest earned: £1419 (9.5% of notional investment) Loans written of : £230 (1.4% of notional investment). Recovery rate 6.5%. Loans in default: £1550 (10.3% of notional investment) Loans on watchlist: £1780 (11.9% of notional investment) So IRR is up from around 1 year ago by around 50bp BUT total loans written-off/default/watchlist has jumped hugely to 23.6% of notional investment or 250% of interest earned (albeit looking at default metrics as a % of interest is meaningless). Assuming I lose 10% of the principal on the loans on my default/watch-list, my IRR falls to 4.48%, a 30% haircut 1.74%, and a 50% haircut -1.00%. Still hard to see a negative return outcome but also increasingly hard to see a return above 4.5%. I don't really see the impact of the "expertise" in the actual return number and, if anything, the 1.5% management fee is just a NAV drag. The fact they invested on Collateral is also a concern since my background checks threw up some possible red flags but clearly theirs did not. I was going to give it two full years but I'm going to exit since the experiment has failed in my view. We will be sorry to see you go yangmills but thank you trying out BM, and sharing your experiences. The objective of BM is (1) capital preservation and (2) a consistent return. Whilst your returns of c6% pa. is marginally below the average after fees of 1.5% pa; I (personally) belive this is an attractive return given the risk. I wish you continued success with your direct lending activities.
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Post by stevefindlay on May 24, 2018 21:47:48 GMT
The question that comes to mind for me is what kind of loans are the significant portion in BM that aren't p2p? Are they more or less the same risk, ie borrowers are the same bracket of some kind or another, or are they different? Lower risk bridge finance loans, where we co-invest alongside the loan originators. So we have better alignment of interests. The *only* platforms we've seen losses on underlying loans are from P2P platforms.
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If you can lose up to 1% or 2% of your investment on each default you really can't afford many defaults in a year if you are to get anywhere near the projected return, having two already does not bode well.