yangmills
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Post by yangmills on May 25, 2018 8:15:14 GMT
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. My returns are not "c6% pa.". They are only 5.8%, assuming everything in the default and watchlist recovers at par. Unfortunately over 20% of my portfolio is on the default or watchlist. So a 10% haircut (comparable to my current writen-off loans) will reduce my returns to around 4.5%. It seems BM must be absolutely confident of no losses. In that case, BM should be happy to take every loan off me at par. If that is the case, I am very happy to accept. As I pointed out, it's unlikely that I will generate a negative returns, so capital preserrvation will have been achieved. However, given the very benign credit environment over the last two years, capital preservation is not a high bar to aim for. You says it's an attractive return for the risk but we have no evidence yet of what the downside return distribution will be so risk is pretty hard to quantify. When I entered BM, the target return after fees was 7% and the management fee was 1%. Fees have increased from 1% to 1.5% and the target return has not been delivered. Hence my view the experiment has failed.
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Post by stevefindlay on May 25, 2018 8:38:29 GMT
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. My returns are not "c6% pa.". They are only 5.8%, assuming everything in the default and watchlist recovers at par. Unfortunately over 20% of my portfolio is on the default or watchlist. So a 10% haircut (comparable to my current writen-off loans) will reduce my returns to around 4.5%. It seems BM must be absolutely confident of no losses. In that case, BM should be happy to take every loan off me at par. If that is the case, I am very happy to accept. As I pointed out, it's unlikely that I will generate a negative returns, so capital preserrvation will have been achieved. However, given the very benign credit environment over the last two years, capital preservation is not a high bar to aim for. You says it's an attractive return for the risk but we have no evidence yet of what the downside return distribution will be so risk is pretty hard to quantify. When I entered BM, the target return after fees was 7% and the management fee was 1%. Fees have increased from 1% to 1.5% and the target return has not been delivered. Hence my view the experiment has failed. Here is a link to further information regarding Defaults and Watchlist: www.bondmason.com/monitoring-your-investmentsWe are very confident that the vast majority of loans that going into default go on to achieve full recovery - this is based on the direct experience of the portfolio to date.
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ton27
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Post by ton27 on May 25, 2018 9:03:56 GMT
stevefindlay, can you give your figures - £ and % for your total defaults/recoveries?
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jlend
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Post by jlend on May 25, 2018 9:44:17 GMT
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. My returns are not "c6% pa.". They are only 5.8%, assuming everything in the default and watchlist recovers at par. Unfortunately over 20% of my portfolio is on the default or watchlist. So a 10% haircut (comparable to my current writen-off loans) will reduce my returns to around 4.5%. It seems BM must be absolutely confident of no losses. In that case, BM should be happy to take every loan off me at par. If that is the case, I am very happy to accept. As I pointed out, it's unlikely that I will generate a negative returns, so capital preserrvation will have been achieved. However, given the very benign credit environment over the last two years, capital preservation is not a high bar to aim for. You says it's an attractive return for the risk but we have no evidence yet of what the downside return distribution will be so risk is pretty hard to quantify. When I entered BM, the target return after fees was 7% and the management fee was 1%. Fees have increased from 1% to 1.5% and the target return has not been delivered. Hence my view the experiment has failed. It will be interesting to hear how you net out once your remaining loans complete or are written off.
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jlend
Member of DD Central
Posts: 1,840
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Post by jlend on May 25, 2018 9:48:04 GMT
My returns are not "c6% pa.". They are only 5.8%, assuming everything in the default and watchlist recovers at par. Unfortunately over 20% of my portfolio is on the default or watchlist. So a 10% haircut (comparable to my current writen-off loans) will reduce my returns to around 4.5%. It seems BM must be absolutely confident of no losses. In that case, BM should be happy to take every loan off me at par. If that is the case, I am very happy to accept. As I pointed out, it's unlikely that I will generate a negative returns, so capital preserrvation will have been achieved. However, given the very benign credit environment over the last two years, capital preservation is not a high bar to aim for. You says it's an attractive return for the risk but we have no evidence yet of what the downside return distribution will be so risk is pretty hard to quantify. When I entered BM, the target return after fees was 7% and the management fee was 1%. Fees have increased from 1% to 1.5% and the target return has not been delivered. Hence my view the experiment has failed. Here is a link to further information regarding Defaults and Watchlist: www.bondmason.com/monitoring-your-investmentsWe are very confident that the vast majority of loans that going into default go on to achieve full recovery - this is based on the direct experience of the portfolio to date. Am not sure if this has been discussed before. Have you considered reducing your fee for individuals if you do not meet your target return for them as you are very confident. Might be an interesting feature.
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Post by stevefindlay on May 25, 2018 10:32:43 GMT
Here is a link to further information regarding Defaults and Watchlist: www.bondmason.com/monitoring-your-investmentsWe are very confident that the vast majority of loans that going into default go on to achieve full recovery - this is based on the direct experience of the portfolio to date. Am not sure if this has been discussed before. Have you considered reducing your fee for individuals if you do not meet your target return for them as you are very confident. Might be an interesting feature. Not allowed under regulatory guidelines - it would be equivalent to profit-sharing in a fund and create a Collective Investment Scheme. However, our up-coming bonds will do something similar - set the level of return for clients.
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Post by stevefindlay on May 25, 2018 10:48:06 GMT
stevefindlay , can you give your figures - £ and % for your total defaults/recoveries? Please see our statistics page for details: bondmason.com/statistics-pageHere are some current details stats to provide additional transparency / colour: Total losses since inception: £56,968 (since Oct 2016) Total amount invested: £35M Losses as a percentage of total amount investment: 16bps. (0.16%) Total interest paid: £1.14M Losses as a percentage of interest paid: 5% NB: Average term of loan: 5 months. (which is why £1.14M / £35M = 3.3%; not 8%) Annual expected loss as a percentage of invested capital: 38 bps Annual expected loss as a percentage of interest earned: 4.75% Proportion of loans going into default / watchlist: 12% Loss given default ratio: 1.3% (this is the expected loss on average for a loan which has gone into default)
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jlend
Member of DD Central
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Post by jlend on May 25, 2018 13:58:47 GMT
Am not sure if this has been discussed before. Have you considered reducing your fee for individuals if you do not meet your target return for them as you are very confident. Might be an interesting feature. Not allowed under regulatory guidelines - it would be equivalent to profit-sharing in a fund and create a Collective Investment Scheme. However, our up-coming bonds will do something similar - set the level of return for clients. Or put some money in a discretionary fund in the same way PFs work? Is that not allowed?
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jlend
Member of DD Central
Posts: 1,840
Likes: 1,465
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Post by jlend on May 29, 2018 9:59:39 GMT
Not allowed under regulatory guidelines - it would be equivalent to profit-sharing in a fund and create a Collective Investment Scheme. However, our up-coming bonds will do something similar - set the level of return for clients. Or put some money in a discretionary fund in the same way PFs work? Is that not allowed? Did you ever look into this?
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Post by stevefindlay on May 29, 2018 10:57:07 GMT
Or put some money in a discretionary fund in the same way PFs work? Is that not allowed? Did you ever look into this? We did investigate. It isn't possible for us to put a PF over the top of the BM Receivables Model, as it could create a Collective Investment Scheme. There are arguments that a PF creates a CIS within P2P lending generally - I know this has been a discussion topic in the industry for some time. The closest way for us to offer a PF equivalent, is to issue bonds with an equity layer over the top. Which is very similar to a PF, but perhaps slightly better, as there is an upfront injection, as well as a continuing provision over time. Structured correctly, these can also sit within an ISA, improving the tax structuring. The only downsides of this are (i) increased admin costs and (ii) allocating returns to build up the equity layer - therefore the rates anticipated would be lower than the standard BM product. This is what we are working on right now - a series of ISA eligible, equity cushioned bonds - and will launch in 2018...
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jlend
Member of DD Central
Posts: 1,840
Likes: 1,465
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Post by jlend on May 29, 2018 13:41:40 GMT
Did you ever look into this? We did investigate. It isn't possible for us to put a PF over the top of the BM Receivables Model, as it could create a Collective Investment Scheme. There are arguments that a PF creates a CIS within P2P lending generally - I know this has been a discussion topic in the industry for some time. The closest way for us to offer a PF equivalent, is to issue bonds with an equity layer over the top. Which is very similar to a PF, but perhaps slightly better, as there is an upfront injection, as well as a continuing provision over time. Structured correctly, these can also sit within an ISA, improving the tax structuring. The only downsides of this are (i) increased admin costs and (ii) allocating returns to build up the equity layer - therefore the rates anticipated would be lower than the standard BM product. This is what we are working on right now - a series of ISA eligible, equity cushioned bonds - and will launch in 2018... Is this an FCA regulated, FOS eligible product? I see you mention an upfront capital injection. The P2P PFs i have seen have all started with an initial capital injection (AC, RS, Growth Street etc) so that sounds a bit similar as well. Are you including a process by which you inject further capital if your loan selection turns out to be poor?
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Post by stevefindlay on May 29, 2018 14:13:42 GMT
We did investigate. It isn't possible for us to put a PF over the top of the BM Receivables Model, as it could create a Collective Investment Scheme. There are arguments that a PF creates a CIS within P2P lending generally - I know this has been a discussion topic in the industry for some time. The closest way for us to offer a PF equivalent, is to issue bonds with an equity layer over the top. Which is very similar to a PF, but perhaps slightly better, as there is an upfront injection, as well as a continuing provision over time. Structured correctly, these can also sit within an ISA, improving the tax structuring. The only downsides of this are (i) increased admin costs and (ii) allocating returns to build up the equity layer - therefore the rates anticipated would be lower than the standard BM product. This is what we are working on right now - a series of ISA eligible, equity cushioned bonds - and will launch in 2018... Is this an FCA regulated, FOS eligible product? I see you mention an upfront capital injection. The P2P PFs i have seen have all started with an initial capital injection (AC, RS, Growth Street etc) so that sounds a bit similar as well. Are you including a process by which you inject further capital if your loan selection turns out to be poor?
Yes Capital injection
The intention is to start with cover, and then grow the equity buffer over time (as an increasing % of AUM, not just fixed), and to cater for the full length of a credit cycle (not just historical, benign credit environments). Details to follow in due course...
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bababill
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Post by bababill on May 29, 2018 23:50:17 GMT
The *only* platforms we've seen losses on underlying loans are from P2P platforms. In regards to the above quotation from Bondmason, regrettably I can not believe it is the truth and find it a misrepresentation of facts. I have experienced losses on this platform in the invoice discounting category which I believe were either Platform Black (now Sancus) or Market Invoice. Both of these do not fall into the p2p platform criteria (36H compliant) and losses on these platforms cannot enjoy loss relief against income if held individually.
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Post by stevefindlay on May 30, 2018 7:10:44 GMT
The *only* platforms we've seen losses on underlying loans are from P2P platforms. In regards to the above quotation from Bondmason, regrettably I can not believe it is the truth and find it a misrepresentation of facts. I have experienced losses on this platform in the invoice discounting category which I believe were either Platform Black (now Sancus) or Market Invoice. Both of these do not fall into the p2p platform criteria (36H compliant) and losses on these platforms cannot enjoy loss relief against income if held individually. We define P2P platforms, as lending (investment) platforms that the standard retail investor has access to. Not by the 36h distinction. When we comment on our non-P2P lending partners - these are often exclusive relationships and/or only available to institutional investors.
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ashtondav
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Post by ashtondav on May 30, 2018 8:14:04 GMT
Did you ever look into this? We did investigate. It isn't possible for us to put a PF over the top of the BM Receivables Model, as it could create a Collective Investment Scheme. There are arguments that a PF creates a CIS within P2P lending generally - I know this has been a discussion topic in the industry for some time. The closest way for us to offer a PF equivalent, is to issue bonds with an equity layer over the top. Which is very similar to a PF, but perhaps slightly better, as there is an upfront injection, as well as a continuing provision over time. Structured correctly, these can also sit within an ISA, improving the tax structuring. The only downsides of this are (i) increased admin costs and (ii) allocating returns to build up the equity layer - therefore the rates anticipated would be lower than the standard BM product. This is what we are working on right now - a series of ISA eligible, equity cushioned bonds - and will launch in 2018... I’ll bet they won’t yield anywhere near 6%, though....
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