New Performance Data Beta

It's like review sites - they are used more by the unfairly treated and disgruntled. Plus, it's not a simple reporting forum here, I don't think anyone would interject those reporting bad scores with a good score - plus we all know that time invested is a critical factor.

My accounts are still considerably below these amounts, and core is at least 1% higher than plus returns in investment and ISA.

True they may well have been lower. However, as seen in the graphs published, due to the delay before loans are defaulted, the returns over the initial investment phase should be significantly above the expected return. Personally I haven't seen a reduction in the proportion of bad debts later in the terms (although the absolute amount drops due to defaulted loans having repaid part by then as well as the amount repaid early). As a result, I would expect and have experienced a further decline once I started withdrawing as repaid (as there are no early phase loans to provide an enhanced return). As such, I would expect that the average return will decline steadily after the initial investment phase plus time for default recognition which will increase at the end, so if returns to date now for those continuing to reinvest are below expectations, total return for these loans is likely to be lower still to repayment.

I never received a clear response, but I believe that the "expected return" from a loan is estimated as interest due over the full term less expected net capital losses from default. This overstates the return. Firstly there will be losses of interest as well as capital on default, secondly recoveries are likely to be much later than due and so in percentage terms will also reduce returns even 'though they are repaideventually. Also, although at least one poster disagrees with me, I believe that early repayments also reduce returns as I expect that the expected defaults from these loans is lower than for an average loan (some loans that are higher risk may be refinanced and so repaid early, but peoples credited worthiness changes. I suspect those with increased credit worthiness are more likely to repay [either due to surplus funds or refinancing at lower rates available to those more creditworthy] than those at increased risk [can't refinance cost effectively and no funds to repay]).

JMHO

- PM  

My NAR last month was 3.02%. another couple of big defaults and I've lost again so I'm down to 2.79%. I think at those levels, I'm better off with bonds, so I've started selling. It shows that after 2 years with Zips, to sell quick and incur the 1% penalty would leave me with less than I invested.

One of the points of something like Zopa is that it automatically spreads the risk over a number of loans. Given that, it should average out close to their projection, yet I'm 2%+ down on projected returns.

So can someone give me an idea how to frame this - in my mind, thus must be outside 2 standard deviations and their algorithm isn't working, though I'm not sure exactly what I'm measuring it against.

I think there should be a measure where all loans in arrears are considered bad debt.

The general progression is arrears, collections, arrangement default.

Yes there are occasionally loans that recover after a missed payment but it seems in general once a payment has been missed the loan will pretty much inevitably go bad.

I track total gross income minus "late" which gives me currently an IRR of about 3.0%.
If I use ZOPA methods where late loans are not treated as defaulted, the IRR is 4.5%.

The funds were invested 90% Plus, 10% Core,  in the 3rd quarter 2017

Recoveries are currently running at about 0.2% per annum.