trevor
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Post by trevor on Jun 29, 2018 15:07:53 GMT
I diversify within a platform and across platforms to reduce risks. So I shall continue to use FC but I have a lot more in AC where interest is higher I.e. MLA and secured.
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blender
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Post by blender on Jun 29, 2018 16:13:57 GMT
I guess that they did not find enough nervous investors willing to take 4.8% so that other devil-may-care 'balanced' investors could take 7.2%. How scary is 'balanced'? We predicted this outcome. They have just closed the gap, perhaps before going to just one rate at about 6%. The range helps them to do that sooner, the bottom of the range being close to the 'conservative' offer. One more reason to leave, if you needed it.
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invester
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Post by invester on Jun 29, 2018 17:08:22 GMT
Agree with the last comment, there seems to be not much point in offering two products, just make it one. But no doubt the new product will be a further sneaky trick, those on the balanced product have another fall in rates, those on the conservative product then forced to be non-conservative for only another extra 0.5% return.
One good thing though, I managed to sell £10k of loans today in less than an hour. I suppose that FC's attitude may well be if the product earns the not-clued-up 5.5% and is liquid, are they going to complain.
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Post by samford71 on Jun 29, 2018 17:45:36 GMT
This seems like a prudent decision by FC. The default rate on their 2016 loan cohort is running around 0.8% above prior cohorts, which clearly adds around 0.5-0.6% to their LGD numbers. It's unlikely that can be improved at this point. I also perceive isses with their 2H17 and 1H18 cohorts. There is no doubt that they are trying to ramp up their loan book size into the IPO, since their valuation depends on that number and lower quality loans may be going on to the book. I tend to think that 6-7% may still be optmistic. However, I'm not that bearish on FC. I think any platform that can generate even 5% over the next few years will be doing a great job.
Given a choice I prefer FCIF to FC. Around 25% of the FCIF loans are originated out of the US. I was in a meeting with the head of the consumer lending arm of a major US bank last week. They are seeing the wages from SME employees up >6% yoy against <2% in 2017. The consumer is in good shape with 45% of credit card balances being paid in full, while <10% are the minimum. Consumers are not feeling the pinch with luxuries up 13% yoy. This is despite gasoline prices up 19% yoy.
This is in total contrast to UK SME/consumer position. All the equivalent early signals are that default rates from SME loans, development loans, consumer loans etc are rising in the UK. Brexit uncertainty is really bearing down, the impact of the weak currency has faded and we're just late cycle. I don't think there is anywhere really to hide. I think it's a bit naive to think other platforms are going to avoid the same issues, even those that are currently still loved like Abl, MT etc. That isn't a recommendation. I'm winding down pro-cyclical stuff like P2P to buy alpha. FCIF is an IT so it can get hammered by selling pressure but at a fundamental level I think to reduce UK loan exposure to buy US loan exposure is a decent trade.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Jun 30, 2018 10:53:57 GMT
Covert admission that bad debts are UP?
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blender
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Post by blender on Jun 30, 2018 18:58:03 GMT
Covert admission that bad debts are UP? Bad debt will be going up because they are currently pushing lending, to anyone. We have a new ISA this FY and two of the loans have failed to make the first repayment, one defaulted, one ceased trading and going into liquidation. In total six loans are downgraded, after a couple of months.
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ashtondav
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Post by ashtondav on Jul 1, 2018 7:56:54 GMT
This seems like a prudent decision by FC. The default rate on their 2016 loan cohort is running around 0.8% above prior cohorts, which clearly adds around 0.5-0.6% to their LGD numbers. It's unlikely that can be improved at this point. I also perceive isses with their 2H17 and 1H18 cohorts. There is no doubt that they are trying to ramp up their loan book size into the IPO, since their valuation depends on that number and lower quality loans may be going on to the book. I tend to think that 6-7% may still be optmistic. However, I'm not that bearish on FC. I think any platform that can generate even 5% over the next few years will be doing a great job. Given a choice I prefer FCIF to FC. Around 25% of the FCIF loans are originated out of the US. I was in a meeting with the head of the consumer lending arm of a major US bank last week. They are seeing the wages from SME employees up >6% yoy against <2% in 2017. The consumer is in good shape with 45% of credit card balances being paid in full, while <10% are the minimum. Consumers are not feeling the pinch with luxuries up 13% yoy. This is despite gasoline prices up 19% yoy. This is in total contrast to UK SME/consumer position. All the equivalent early signals are that default rates from SME loans, development loans, consumer loans etc are rising in the UK. Brexit uncertainty is really bearing down, the impact of the weak currency has faded and we're just late cycle. I don't think there is anywhere really to hide. I think it's a bit naive to think other platforms are going to avoid the same issues, even those that are currently still loved like Abl, MT etc. That isn't a recommendation. I'm winding down pro-cyclical stuff like P2P to buy alpha. FCIF is an IT so it can get hammered by selling pressure but at a fundamental level I think to reduce UK loan exposure to buy US loan exposure is a decent trade. So where do you stash your wedge? - shares at the end of a nine year bull market? - interest rates rising so bond prices falling? - top BS accounts below inflation? - p2p which will collapse with the next recession? There is nowhere. I will buy FCIF when it sinks to a 20% discount which it will sometime in the next two years - not before.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Jul 1, 2018 10:37:01 GMT
So where do you stash your wedge? Cash. Even flatlining cash is beginning to look a decent prospect. Cash will be King again, it's just a matter of time.
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Post by samford71 on Jul 1, 2018 11:25:11 GMT
So where do you stash your wedge? - shares at the end of a nine year bull market? - interest rates rising so bond prices falling? - top BS accounts below inflation? - p2p which will collapse with the next recession? There is nowhere. I will buy FCIF when it sinks to a 20% discount which it will sometime in the next two years - not before. I didn't say that FCIF was a buy. Just that US SME exposure is a decent bet re: UK SME loan exposure. Given the P2P IT's illiquidity then any sizeable selling pressure would see prices at 50-70% (albeit I would expect the trusts to intervene to support the share price before then to stop that happening). There is nothing wrong with cash. I'm massively ahead of my required return benchmark (inflation+4% over the cycle, post tax) so I'm happy to miss out of further gains to protect capital for a few years. My USD and AUD cash are marginally ahead of local inflation. I would argue the chance of a recession by say 2022 is high and the average global equity market drop in recession is around 30%. So while further gains are easily possible, I see it as becoming rather 50:50. Some on this forum seem obsessed by being fully invested or having no cash drag. If I have 100% in a 6.5% P2P account, it's the same as 50% in cash at 1% and 50% in a 12% P2P account (or for that matter 200% in a 3.5% P2P account, with 100% borrowed at 1%). It's the risk you run that matters, not cash. So right now 20% in cash, 35% in alpha products (mainly hedge funds), 20% in equities, 10% in property, 10% in fixed income (inc <5% P2P), 5% in other stuff (commodities etc). I'm up 7% this year at this point so I'm tempted to go to 50%+ cash and just hunker down a bit.
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ashtondav
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Post by ashtondav on Jul 1, 2018 18:49:17 GMT
Yeah take those points. I only have access to hedgies through ITs and mainly unimpressive. Target Absolute Return Funds - bl**dy useless on the whole. Ok, I guess cash is the only real protector - maybe a bit of gold. Commercial property? Forget it, it’s being dematerialised by AMZN. Infrastructure looks sound, though.
I do wish we could have access to NSI index linkers - ideal for a retired old codger like me!M
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Post by df on Jul 1, 2018 19:34:19 GMT
Covert admission that bad debts are UP? Bad debt will be going up because they are currently pushing lending, to anyone. We have a new ISA this FY and two of the loans have failed to make the first repayment, one defaulted, one ceased trading and going into liquidation. In total six loans are downgraded, after a couple of months. I thought they were doing it for a while, delivering loans for anyone who wants them and sometimes (I suspect) at rates requested by borrowers. None of mine ever collapsed before 1st payment, but many on my default list are 2-5 months old loans.
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