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Post by gar on Jun 1, 2020 18:52:17 GMT
Reassuring info, thank you for sharing
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Post by james91 on Jun 1, 2020 19:05:42 GMT
Very interesting and reassuring. I wonder if we'll see the full results of the survey. This really is the big test for P2P - if Ratesetter and others can get through this once in a century economic crisis, I think it has the potential to become far more than the niche industry that it is currently, and seriously start to challenge the banks. It's going to be many months/years until we really know.
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Post by freddles91 on Jun 1, 2020 19:17:23 GMT
Can anybody give me a rundown? Hidden behind a paywall.
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Post by freddles91 on Jun 1, 2020 19:30:22 GMT
Can anybody give me a rundown? Hidden behind a paywall. Open in a different browser or incognito tab in Chrome to bypass the paywall. Cheers, seems to be fairly positive.
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Post by diversifier on Jun 1, 2020 21:21:33 GMT
Can anybody give me a rundown? Hidden behind a paywall. Their absolute focus has been existing customers, apparently. “Around 15%” of *investors* asked for an RYI. “Around half” of those sold only a proportion of portfolio. Apparently, Rhydian was very happy with the survey, 9% extremely unlikely to invest again, 14% extremely likely. I wonder whether he’s going to repeat the survey when people have waited longer for their RYI. He’s going to have a lot of explaining to do in mid July, once people have waited for 4.2 months = 15% of the average loan duration, if the majority of RYI’ers still haven’t had their money!
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starfished
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Post by starfished on Jun 1, 2020 23:01:36 GMT
“Around 15%” of *investors* asked for an RYI. “Around half” of those sold only a proportion of portfolio. Apparently, Rhydian was very happy with the survey, 9% extremely unlikely to invest again, 14% extremely likely. I wonder whether he’s going to repeat the survey when people have waited longer for their RYI. He’s going to have a lot of explaining to do in mid July, once people have waited for 4.2 months = 15% of the average loan duration, if the majority of RYI’ers still haven’t had their money!Ratesetter has several faults, including an appetite to make their website increasingly user unfriendly. However, I really don't understand how people can be so unreasonable about a product that never guaranteed liquidity, where exposure clearly extended to loans with up to 5 year terms, has proved to be iliquid after a very significant pandemic...
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Post by inquiete on Jun 2, 2020 7:46:17 GMT
RS would gain much more respect if it treated its customers like adults. Either say nothing about redemption requests or say everything. Don't manipulate the data with such fatuous remarks as 15% of customers requested early access to their money when the volume of redemption requests is demonstrably a far greater percentage of their business than this.
The fact that only 14% of redeemers are very likely to invest again says that quite a lot of investors have had quite enough of this smoke and mirrors.
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Post by diversifier on Jun 2, 2020 9:44:09 GMT
“Around 15%” of *investors* asked for an RYI. “Around half” of those sold only a proportion of portfolio. Apparently, Rhydian was very happy with the survey, 9% extremely unlikely to invest again, 14% extremely likely. I wonder whether he’s going to repeat the survey when people have waited longer for their RYI. He’s going to have a lot of explaining to do in mid July, once people have waited for 4.2 months = 15% of the average loan duration, if the majority of RYI’ers still haven’t had their money!Ratesetter has several faults, including an appetite to make their website increasingly user unfriendly. However, I really don't understand how people can be so unreasonable about a product that never guaranteed liquidity, where exposure clearly extended to loans with up to 5 year terms, has proved to be iliquid after a very significant pandemic... Errr, no. Instant Access is a straw man, as is the pandemic. The issue is misleading financial data and arithmetic, and dodgy Ts and Cs with “unexpected” side effects. Just because Instant is unreasonable, doesn’t mean that 5 years is OK. RS are exploiting unsophisticated investors who don’t understand the technical definition of the word “duration”. This is *not* what you should expect from this product. The average length of the loan in Access is 28 months. Not “up to 5 years”. It’s written in black and white on their financial data. The *duration* of this loan fund should be half that. You should expect to get half your money out in 14 months, based on the financial data RS provide. It turns out that mysteriously half of 28 is 33 months. This number may well surprise you. I suggest you dump out your personal Access loanbook to spreadsheet, and calculate your personal average outstanding loan duration. If you haven’t done that until now, prepare to be very surprised, and fairly unhappy. If you still think duration is just pandemic situation, then you really haven’t understood the implications at all. 1) If duration were really 14 months, then most of the Provision Fund would be an actual cash mountain, as many people assume. But because true underlying duration is so high, 80% of the PF consists of expected future income. 2) If duration had been as written, RS would have been able to release £14m per week, not £4.5m. They could have released their entire (allegedly) 15% RYI backlog in just over two months, and now back to an even keel two weeks ago. An accurate statement of Duration drives *everything*. It’s far more important than interest rate.
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starfished
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Post by starfished on Jun 2, 2020 9:56:52 GMT
Ratesetter has several faults, including an appetite to make their website increasingly user unfriendly. However, I really don't understand how people can be so unreasonable about a product that never guaranteed liquidity, where exposure clearly extended to loans with up to 5 year terms, has proved to be iliquid after a very significant pandemic... Errr, no. Instant Access is a straw man, as is the pandemic. The issue is misleading financial data and arithmetic, and dodgy Ts and Cs with “unexpected” side effects. Just because Instant is unreasonable, doesn’t mean that 5 years is OK. RS are exploiting unsophisticated investors who don’t understand the technical definition of the word “duration”. This is *not* what you should expect from this product. The average length of the loan in Access is 28 months. Not “up to 5 years”. It’s written in black and white on their financial data. The *duration* of this loan fund should be half that. You should expect to get half your money out in 14 months, based on the financial data RS provide. It turns out that mysteriously half of 28 is 33 months. This number may well surprise you. I suggest you dump out your personal Access loanbook to spreadsheet, and calculate your personal average outstanding loan duration. If you haven’t done that until now, prepare to be very surprised, and fairly unhappy. If you still think duration is just pandemic situation, then you really haven’t understood the implications. Let me point out: If duration were really 14 months, then most of the Provision Fund would be an actual cash mountain, as many people assume. But because true underlying duration is so high, 80% of the PF consists of expected future income. That’s just one of several key consequences. An accurate statement of Duration drives *everything*. It’s far more important than interest rate. While I do agree rateseter could be more transparent, I also think some have done minimal research before investing. I personally don't invest in access (less than 10% of what I have in Ratesetter) as it offers no real benefit over the five year market bar the withdrawal fee has always been my view. As a side note, an average term of 28 months could range from individual loans ranging from 1 month to 60 months. Given ratesetter's non-diversified approach, a real risk is all your own loans could be nearer to the 5 year mark. You plan for the worst and hope for the best.
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Post by diversifier on Jun 2, 2020 11:09:45 GMT
Errr, no. Instant Access is a straw man, as is the pandemic. The issue is misleading financial data and arithmetic, and dodgy Ts and Cs with “unexpected” side effects. Just because Instant is unreasonable, doesn’t mean that 5 years is OK. RS are exploiting unsophisticated investors who don’t understand the technical definition of the word “duration”. This is *not* what you should expect from this product. The average length of the loan in Access is 28 months. Not “up to 5 years”. It’s written in black and white on their financial data. The *duration* of this loan fund should be half that. You should expect to get half your money out in 14 months, based on the financial data RS provide. It turns out that mysteriously half of 28 is 33 months. This number may well surprise you. I suggest you dump out your personal Access loanbook to spreadsheet, and calculate your personal average outstanding loan duration. If you haven’t done that until now, prepare to be very surprised, and fairly unhappy. If you still think duration is just pandemic situation, then you really haven’t understood the implications. Let me point out: If duration were really 14 months, then most of the Provision Fund would be an actual cash mountain, as many people assume. But because true underlying duration is so high, 80% of the PF consists of expected future income. That’s just one of several key consequences. An accurate statement of Duration drives *everything*. It’s far more important than interest rate. While I do agree rateseter could be more transparent, I also think some have done minimal research before investing. I personally don't invest in access (less than 10% of what I have in Ratesetter) as it offers no real benefit over the five year market bar the withdrawal fee has always been my view. As a side note, an average term of 28 months could range from individual loans ranging from 1 month to 60 months. Given ratesetter's non-diversified approach, a real risk is all your own loans could be nearer to the 5 year mark. You plan for the worst and hope for the best. I certainly do plan for the worst.....no more than 5% assets in any one institution. And I had only a fairly small amount in Access, and most remains nicely winding down in 5yr, just sorry to wave that 6% interest goodbye. I think you’re missing the point about “average 28 months can be up to 60 months”. I’m very well aware of that. But it isn’t the standard financial definition. What I care about is very specifically: how long do I have to wait *on average* to receive *half of the money*. That’s it. That’s the definition of duration. That’s what every financial model on the planet takes as inputs. That’s the number that gets combined with duration numbers from other accounts and asset classes into a great big average. The output is a big statistical distribution, with a central maximum at (for me) 2.4 years, and a large standard deviation. My model includes skew returns, fat tails, log-normal distributions, asset class correlations, etc. The official data provided by RS is *wrong*. Simple as that. To illustrate *why* you can’t just use worst-case numbers for 100% recovery, you do realise that 5 years isn’t the correct answer either, right? Because if the PF gets exhausted, and also Ratesetter the *company* goes into administration, then you have to wait for the legal gears to grind to recover the long tail of court orders on debt defaults. Adds a further 2.5 years’ish onto the *gross* debt default rate with recovery percentage. Investors at FS are just going through that now. Long tail numbers are intrinsically brittle and ill-defined.
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starfished
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Post by starfished on Jun 2, 2020 11:41:17 GMT
Probably best to conclude on this as you and I just think about this product in very different ways. I don't think your position is entirely fair but I appreciate I am not going to convince you.
However, if RS went into administration my expectation is to receive zero back so it doesn't affect how I see the term of my investment. Further, if RS went into administration the "access" market would be just as impacted as the five year market.
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adrian77
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Post by adrian77 on Jun 2, 2020 13:58:31 GMT
Exactly - the statement was clearly a PR stunt to talk up the market. Do these people think we are stupid.
Rather than using this PR gubbins I would be more impressed if they just gave us the hard facts and explained the true situation which to me is that there is a massive
demand for funds and they have basically frozen the Access market and are talking up the market in the hope things improve withing the next couple of months. I am not saying they have made the wrong decision just I don't been spoken to as if a 12 year old born yesterday.
Personally I think RS will come through this unlike many others but I won't be re-investing due entirely to them not being exactly transparent in my book.
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wuzimu
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Post by wuzimu on Jun 2, 2020 14:15:07 GMT
....... However, if RS went into administration my expectation is to receive zero back so it doesn't affect how I see the term of my investment. Further, if RS went into administration the "access" market would be just as impacted as the five year market. If your expectation is really to recieve zero back if RS went into administration, that means you are discounting your entire investment on the chances RS will survive (at least) 5 years. This is a small loss making fintech with no govt support!
In an industry where competitors fail all the time!
Is RS survival risk correctly priced at 3-6% pa?
I don't think so, if it is true nearly nothing would be returned to lenders in the case of RS administration (and I prefer not to speculate on that) I would want a yield of at least 30% pa to fairly compensate me for the risk, probably more.... And this is the problem as diversifier explains its all about duration of loan, I think most people, including me did either not pay attention to the changes in T&C or did not understand. In the Access markets the risk went through the roof as the yields on offer came down. 1 & 5 yr arent much better.
Let us pray that RS to weathers this storm
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aju
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Post by aju on Jun 2, 2020 15:20:11 GMT
Can anybody give me a rundown? Hidden behind a paywall. Open in a different browser or incognito tab in Chrome to bypass the paywall. Sssssh! don;t speak too loudly they will fix it - the paywall I mean 
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starfished
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Post by starfished on Jun 2, 2020 15:56:04 GMT
....... However, if RS went into administration my expectation is to receive zero back so it doesn't affect how I see the term of my investment. Further, if RS went into administration the "access" market would be just as impacted as the five year market. If your expectation is really to recieve zero back if RS went into administration, that means you are discounting your entire investment on the chances RS will survive (at least) 5 years. This is a small loss making fintech with no govt support!
In an industry where competitors fail all the time!
Is RS survival risk correctly priced at 3-6% pa?
I don't think so, if it is true nearly nothing would be returned to lenders in the case of RS administration (and I prefer not to speculate on that) I would want a yield of at least 30% pa to fairly compensate me for the risk, probably more.... And this is the problem as diversifier explains its all about duration of loan, I think most people, including me did either not pay attention to the changes in T&C or did not understand. In the Access markets the risk went through the roof as the yields on offer came down. 1 & 5 yr arent much better.
Let us pray that RS to weathers this storm
As I said before, I agree somethings could have been better signposted by RS in the past but other risks where clear which some chose to roll the dice on to get a quick return compared to a bank. I absolutely agree duration is important, which is why I struggled to understand the yield discrepancy in the past between the 1 year market and the 5 year market, let alone 5 year and access. Your point regarding compensation for risk is interesting. Personally no, I don't think access rates are sufficient compensation for the level of risk they represented which is why I did not invest there. Having said that, I also personally don't require 30% p.a. return for taking part in P2P venture. I agree it is risky, but I enjoyed being involved in it, the value of "fun" is hard to assess. But my main mitigation tool was limiting how much went in and putting in money I would not need "early". If I lose everything I have in RS, I would be miffed yes but it wouldn't change the quality of my life nor any of the upcoming decisions I have on the horizon. RS is well placed to weather the storm better than many, but a storm is definitely coming sadly. A clearer view once we get to the end of the year will let us know where we stand.
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