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Post by chris on Oct 2, 2018 8:55:13 GMT
I'm just a bit confused because I saw a comment from someone who was whining about being stuck with a large amount of a defaulted windfarm loan, claiming not to have been responsible for apportioning their money in such a way. I am confused whether they bought this as a manual investment or not. Maybe it was before the access accounts were created. Sorry, I don't know the history.
As to packaged accounts, I'd say - don't inject a massive amount in one go (your choice of 'massive'). Rather, as you suggest, feed some in then check the maximum percentage allocation. If it's OK, add to it.
I'm not sure that strategy would work as you expect, especially if you allocate less than roughly £1k in the first investment. The way the access accounts work the allocation is the same no matter how much you invest. With the other automated accounts the more you invest (up to a point) the closer the system can get you to the average distribution. If you only put £100 in for example then your allocation will be biased towards certain loans, same as it would with other platforms like Z and FC where they stick £10 or £20 into each loan.
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cb25
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Post by cb25 on Oct 2, 2018 9:02:25 GMT
As to packaged accounts, I'd say - don't inject a massive amount in one go (your choice of 'massive'). Rather, as you suggest, feed some in then check the maximum percentage allocation. If it's OK, add to it.
I'm not sure that strategy would work as you expect, especially if you allocate less than roughly £1k in the first investment. The way the access accounts work the allocation is the same no matter how much you invest. With the other automated accounts the more you invest (up to a point) the closer the system can get you to the average distribution. If you only put £100 in for example then your allocation will be biased towards certain loans, same as it would with other platforms like Z and FC where they stick £10 or £20 into each loan. Problem is that Lenders have no way to know in advance what the maximum percentage allocation might be to any one loan.
Is there a guaranteed maximum percentage these days (seemed to be 20% in the past)?
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Post by chris on Oct 2, 2018 9:11:32 GMT
I'm not sure that strategy would work as you expect, especially if you allocate less than roughly £1k in the first investment. The way the access accounts work the allocation is the same no matter how much you invest. With the other automated accounts the more you invest (up to a point) the closer the system can get you to the average distribution. If you only put £100 in for example then your allocation will be biased towards certain loans, same as it would with other platforms like Z and FC where they stick £10 or £20 into each loan. Problem is that Lenders have no way to know in advance what the maximum percentage allocation might be to any one loan.
Is there a guaranteed maximum percentage these days (seemed to be 20% in the past)?
For larger amounts (i.e. above £1k) then the maximum allocated won't exceed 20% in the short term and after a few hours to a couple of days will be diversified down to the average distribution. From memory, so worth checking with the support desk, this should leave lenders with no more than 4 - 5% in any one loan and with the vast majority of loan holdings being 2% or less. That's also something that's improving over time as the number of loans in each account grows allowing the system to redistribute you over more and more loans. Because there are various thresholds on the diversification algorithm to reduce the amount of rebalancing it needs to do smaller sums and deviations from the average are ignored which is why the algorithm doesn't work as well below £1k invested. The access accounts still rebalance almost perfectly below that level due to the different implementation and focus of those accounts leading to different constraints on the code.
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cb25
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Post by cb25 on Oct 2, 2018 9:15:54 GMT
Problem is that Lenders have no way to know in advance what the maximum percentage allocation might be to any one loan.
Is there a guaranteed maximum percentage these days (seemed to be 20% in the past)?
For larger amounts (i.e. above £1k) then the maximum allocated won't exceed 20% in the short term and after a few hours to a couple of days will be diversified down to the average distribution. If the loan defaults in those 'couple of days', you can be left with 20% in a loan. I'd agree seems like a small chance, but having been caught out once by AC's (old) allocation/re-balancing algorithms, I'm very cautious with packaged accounts these days.
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sydb
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Post by sydb on Oct 2, 2018 9:34:19 GMT
I'm just a bit confused because I saw a comment from someone who was whining about being stuck with a large amount of a defaulted windfarm loan, claiming not to have been responsible for apportioning their money in such a way. I am confused whether they bought this as a manual investment or not. Maybe it was before the access accounts were created. Sorry, I don't know the history.
Confession: I'm one of those that go 'whining' on about having close on £6K stuck in defaulted loan 227. If you ever have the misfortune to get a sizeable amount stuck in an AC loan, I'll be interested to see how you deal with it.
Problem with AC and defaulted loans is that they (imo) have a bias towards the borrower. As long as the borrower stays in communication with AC, the borrower is allowed by AC's Ts&Cs to set the options of any Lender Vote. Unsurprisingly, as with loan 227, the borrower rarely goes with a vote option of "force the borrower to repay the loan immediately". If you're not already signed up for the AC private board, I'd really suggest you do so.
As to packaged accounts, I'd say - don't inject a massive amount in one go (your choice of 'massive'). Rather, as you suggest, feed some in then check the maximum percentage allocation. If it's OK, add to it.
But you whined in the nicest way  . Rest assured, I have my fair share of stuck loans in another platform that rhymes with bendy. But then this is the way of P2P. One is unlikely not to end up with long term illiquid loans when one goes for % rates of higher than about 6%.
Thanks for the tips. Max % allocation at the moment with one person/company appears to be about 5%. However, as I understand it, AC can change the allocation at any time so one needs to keep a regular eye on it if concerned. However, given the size of the accounts, its AC's reputation on the line so I guess it's really just down to trust in the competence and integrity of the platform provider.
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cb25
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Post by cb25 on Oct 2, 2018 9:42:00 GMT
Confession: I'm one of those that go 'whining' on about having close on £6K stuck in defaulted loan 227. If you ever have the misfortune to get a sizeable amount stuck in an AC loan, I'll be interested to see how you deal with it.
Problem with AC and defaulted loans is that they (imo) have a bias towards the borrower. As long as the borrower stays in communication with AC, the borrower is allowed by AC's Ts&Cs to set the options of any Lender Vote. Unsurprisingly, as with loan 227, the borrower rarely goes with a vote option of "force the borrower to repay the loan immediately". If you're not already signed up for the AC private board, I'd really suggest you do so.
As to packaged accounts, I'd say - don't inject a massive amount in one go (your choice of 'massive'). Rather, as you suggest, feed some in then check the maximum percentage allocation. If it's OK, add to it.
But you whined in the nicest way . Rest assured, I have my fair share of stuck loans in another platform that rhymes with bendy. But then this is the way of P2P. One is unlikely not to end up with long term illiquid loans when one goes for % rates of higher than about 6%.
Thanks for the tips. Max % allocation at the moment with one person/company appears to be about 5%. However, as I understand it, AC can change the allocation at any time so one needs to keep a regular eye on it if concerned. However, given the size of the accounts, its AC's reputation on the line so I guess it's really just down to trust in the competence and integrity of the platform provider.
Re 'about 5%' - see chris's comment above "For larger amounts (i.e. above £1k) then the maximum allocated won't exceed 20% in the short term and after a few hours to a couple of days will be diversified down to the average distribution".
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sydb
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Post by sydb on Oct 2, 2018 9:43:21 GMT
To OP, There are three types of account on AC. QAA/30DA, GBB/PA and manual. All operate with quite different rules, allocations, liquidity, provision funds, voting, options on default, discounting, etc, etc. I’d suggest spending 30 minutes reading up about them. It would be good if there was a feature table on AC listing all these differences but then if there’s one thing AC are good at, it’s adding complexity and confusion... Thanks, I thought I had! Under 30DAA guidance, for example, I read this: Investors can exit loans early via our Aftermarket, subject to demand from other investors at that time. Via this Aftermarket and at your request, the 30DAA will aim to sell part or all of your investment at any time, subject to continued demand for these loans from other investors.
To me, this implied I could change my allocation within the 30DAA. But, no, it does not mean that you can sell 'a' loan through the aftermarket, only a portion of all the loans in the fund at once. I am not saying that what I thought it meant extrapolates to a viable business model, or makes sense when considering it holistically, just that I thought it meant something it doesn't!
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sydb
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Post by sydb on Oct 2, 2018 9:56:03 GMT
For larger amounts (i.e. above £1k) then the maximum allocated won't exceed 20% in the short term and after a few hours to a couple of days will be diversified down to the average distribution. If the loan defaults in those 'couple of days', you can be left with 20% in a loan. I'd agree seems like a small chance, but having been caught out once by AC's (old) allocation/re-balancing algorithms, I'm very cautious with packaged accounts these days. In 'normal market conditions', you're just talking about GBBA/PSA here, yes? Suspended loans in the 30DAA/QAA are continuously redistributed, as I have understood. I was going to double check earlier (and did actually ask, but someone interpreted 'default' to mean 'suspended'), what actually happens when a loan defaults in the 30DAA/QAA account? Does it jump out of the 'fund' and stick to the investors who were in at the time? Or does it remain as part of the redistributing soup to new and old investors?
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cb25
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Post by cb25 on Oct 2, 2018 10:14:42 GMT
If the loan defaults in those 'couple of days', you can be left with 20% in a loan. I'd agree seems like a small chance, but having been caught out once by AC's (old) allocation/re-balancing algorithms, I'm very cautious with packaged accounts these days. In 'normal market conditions', you're just talking about GBBA/PSA here, yes? Suspended loans in the 30DAA/QAA are continuously redistributed, as I have understood. I was going to double check earlier (and did actually ask, but someone interpreted 'default' to mean 'suspended'), what actually happens when a loan defaults in the 30DAA/QAA account? Does it jump out of the 'fund' and stick to the investors who were in at the time? Or does it remain as part of the redistributing soup to new and old investors? Yes, I was talking about GBBAs, PSA. Re the 30DAA/QAA, I believe (though clearly could be wrong), that you should be able - in 'normal' times - le to withdraw your money even if it's in suspended loans. I should also do more reading up on this!
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 2, 2018 10:17:10 GMT
If the loan defaults in those 'couple of days', you can be left with 20% in a loan. I'd agree seems like a small chance, but having been caught out once by AC's (old) allocation/re-balancing algorithms, I'm very cautious with packaged accounts these days. In 'normal market conditions', you're just talking about GBBA/PSA here, yes? Suspended loans in the 30DAA/QAA are continuously redistributed, as I have understood. I was going to double check earlier (and did actually ask, but someone interpreted 'default' to mean 'suspended'), what actually happens when a loan defaults in the 30DAA/QAA account? Does it jump out of the 'fund' and stick to the investors who were in at the time? Or does it remain as part of the redistributing soup to new and old investors? Need to deferentiate between default and recovery. A loan in default won't necessarily be suspended so if not would carry on as normal, a loan that is in recovery will be suspended. Suspended loans (either default or recovery) remain part of the QAA soup providing the provision fund can cover any withdrawals of funds within those loans if required. If not I believe they would become stuck.
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Post by chris on Oct 2, 2018 10:53:51 GMT
For larger amounts (i.e. above £1k) then the maximum allocated won't exceed 20% in the short term and after a few hours to a couple of days will be diversified down to the average distribution. If the loan defaults in those 'couple of days', you can be left with 20% in a loan. I'd agree seems like a small chance, but having been caught out once by AC's (old) allocation/re-balancing algorithms, I'm very cautious with packaged accounts these days. You could. When buying the system tries to balance your purchases across all the loans available on the aftermarket at that present time, so during times of plenty the allocations will be lower than that. However when there isn't much available then it can be as high as 20%. Normally the rebalancing starts within a few minutes of you making a purchase but can take a while to fully diversify you if you have a large imbalance. We still make the MLA available to you if you want / need more control, and the access accounts rebalance nearly instantly after a deposit.
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Post by chris on Oct 2, 2018 10:55:51 GMT
In 'normal market conditions', you're just talking about GBBA/PSA here, yes? Suspended loans in the 30DAA/QAA are continuously redistributed, as I have understood. I was going to double check earlier (and did actually ask, but someone interpreted 'default' to mean 'suspended'), what actually happens when a loan defaults in the 30DAA/QAA account? Does it jump out of the 'fund' and stick to the investors who were in at the time? Or does it remain as part of the redistributing soup to new and old investors? Yes, I was talking about GBBAs, PSA. Re the 30DAA/QAA, I believe (though clearly could be wrong), that you should be able - in 'normal' times - le to withdraw your money even if it's in suspended loans. I should also do more reading up on this! Yes, whilst there is sufficient headroom in the provision fund vs expected losses those loans remain tradable within the access accounts. This is not true for other accounts.
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cb25
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Post by cb25 on Oct 2, 2018 11:03:32 GMT
Yes, I was talking about GBBAs, PSA. Re the 30DAA/QAA, I believe (though clearly could be wrong), that you should be able - in 'normal' times - le to withdraw your money even if it's in suspended loans. I should also do more reading up on this! Yes, whilst there is sufficient headroom in the provision fund vs expected losses those loans remain tradable within the access accounts. This is not true for other accounts. Is the value of the PFs for the 30DAA/QAA accounts displayed anywhere we can see it?
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jlend
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Post by jlend on Oct 2, 2018 11:04:06 GMT
Yes, I was talking about GBBAs, PSA. Re the 30DAA/QAA, I believe (though clearly could be wrong), that you should be able - in 'normal' times - le to withdraw your money even if it's in suspended loans. I should also do more reading up on this! Yes, whilst there is sufficient headroom in the provision fund vs expected losses those loans remain tradable within the access accounts. This is not true for other accounts. Hi chrisWhere on the website can we see how much headroom there is in the provision fund?
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Post by chris on Oct 2, 2018 11:40:51 GMT
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. Rest assured, I have my fair share of stuck loans in another platform that rhymes with bendy. But then this is the way of P2P. One is unlikely not to end up with long term illiquid loans when one goes for % rates of higher than about 6%.