zlb
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Post by zlb on Nov 14, 2018 22:43:04 GMT
In trying to diversify, I find platforms are converging on property for security. Eg AC mostly, now, property secured business loans. BM increasingly property. Many others are also. This seems like a risk of non-diversification. Any comments stevefindlay ? Or others? Is there a sector difference? |
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elliotn
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Post by elliotn on Nov 15, 2018 4:08:36 GMT
In trying to diversify, I find platforms are converging on property for security. Eg AC mostly, now, property secured business loans. BM increasingly property. Many others are also. This seems like a risk of non-diversification. Any comments stevefindlay ? Or others? Is there a sector difference? There's the risk of asset concentration particularly based on your view of any economic uncertainty over the short to medium term. There will be sector difference ie residential (LLI, LB), development, commercial (note PL typically secure income generating properties). There may be a certain level of correlation in a general downturn although developments might lack funds to complete and commercial tends to be affected quicker by market sentiment than long term residential mortgages (more an unemployment play). The upside though is a specifically charged asset ring-fenced from business performance unlike a debenture typical of SME lending (see recent AC default) although that does offer significant sector diversification (TC, LC, C2F, FC). You can manage your own asset diversification too ie capital assets on abl, valuables on unb, cars/ valuables/ collectables on platforms like FS, MT.
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Post by stevefindlay on Nov 15, 2018 7:58:56 GMT
Diversification is definitely a helpful tool.
We are increasingly focusing on property refurbishment and BTL finance.
Reasons being (at a high level).
1. We want to operate at the lower end of the risk spectrum.
2. We have struggled to get comfortable with the offerings in the SME market in P2P lending.
3. We can't do consumer lending at present (regulatory reasons). I do think there are some good consumer P2P propositions in the market.
4. We don't like the large scale property development funding eg Lendy.
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zlb
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Posts: 1,422
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Post by zlb on Nov 15, 2018 23:02:31 GMT
In trying to diversify, I find platforms are converging on property for security. Eg AC mostly, now, property secured business loans. BM increasingly property. Many others are also. This seems like a risk of non-diversification. Any comments stevefindlay ? Or others? Is there a sector difference? There's the risk of asset concentration particularly based on your view of any economic uncertainty over the short to medium term. There will be sector difference ie residential (LLI, LB), development, commercial (note PL typically secure income generating properties). There may be a certain level of correlation in a general downturn although developments might lack funds to complete and commercial tends to be affected quicker by market sentiment than long term residential mortgages (more an unemployment play). The upside though is a specifically charged asset ring-fenced from business performance unlike a debenture typical of SME lending (see recent AC default) although that does offer significant sector diversification (TC, LC, C2F, FC). You can manage your own asset diversification too ie capital assets on abl, valuables on unb, cars/ valuables/ collectables on platforms like FS, MT. thanks. Food for thought - easier to understand the property market through casual exposure over time, than collectables which are more niche.
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