dead-money
Rocket to the Moon
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Post by dead-money on Jun 18, 2020 14:36:54 GMT
Why would I buy AA SM when I already have a significant proportion in that pool already? The AA SM isn't really focused at you as a buyer - rather I see it that it will attract new money or even new investors to the platform. I can see it being appealing to institutional investors with deep pockets - ie invest 100k, get 110k of holdings, assuming 10% discounting for example. The platform needs people with deep pockets to really make a dent in the liquidity problem, and this will be far more effective than a cashback type promotion to attract new funds. Hmm, still waiting for final stage payment of last year's cashback promotion to be paid out, some months later than originally advertised...
This 'Black Swan' event has really exposed the reliance on new business and new money coming into the platform to allow AC to fulfill it's existing known obligations to both borrowers and lenders.
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ceejay
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Post by ceejay on Jun 18, 2020 15:02:31 GMT
Why would I buy AA SM when I already have a significant proportion in that pool already? The AA SM isn't really focused at you as a buyer - rather I see it that it will attract new money or even new investors to the platform. I can see it being appealing to institutional investors with deep pockets - ie invest 100k, get 110k of holdings, assuming 10% discounting for example. The platform needs people with deep pockets to really make a dent in the liquidity problem, and this will be far more effective than a cashback type promotion to attract new funds. OK, so you invest 100k and get, say, 110k of notional holdings ... but if the secondary market remains active then your only way out will be through that same secondary market. No-one is going to buy direct at par if they can buy on the SM at 10% off! And as we are seeing now, the ability of the AAs to release funds organically is, shall we say, limited. So your notional 110k is really only worth 100k still, unless the market discount rate changes, so really you're betting on the direction that will take. This looks less and less like a viable product for retail investors. I think it would be better and more honest if AC were able to admit that the AAs are entering a 5 year run down period, and that they found a different way to grease the wheels of the MLA. The Secondary Market for AAs is needed to make this rundown manageable, but I can't see it making them viable in the long term.
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TitoPuente
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Post by TitoPuente on Jun 18, 2020 15:33:52 GMT
OK, so you invest 100k and get, say, 110k of notional holdings ... but if the secondary market remains active then your only way out will be through that same secondary market. No-one is going to buy direct at par if they can buy on the SM at 10% off! And as we are seeing now, the ability of the AAs to release funds organically is, shall we say, limited. So your notional 110k is really only worth 100k still, unless the market discount rate changes, so really you're betting on the direction that will take. In your example, an investor will enter with 100k (actually, 99k if you want the discount to be assumed at 10%) buying 110k of assets, will stay for a period of time and produce, say 10k interest, then exit at the same 10% discount, realising 108k, so earning a net benefit (assuming that the discount does not change, as in your example). This is exactly the same principle as in any market with, well, market pricing.
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theta
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Post by theta on Jun 18, 2020 15:38:03 GMT
The AA SM isn't really focused at you as a buyer - rather I see it that it will attract new money or even new investors to the platform. I can see it being appealing to institutional investors with deep pockets - ie invest 100k, get 110k of holdings, assuming 10% discounting for example. The platform needs people with deep pockets to really make a dent in the liquidity problem, and this will be far more effective than a cashback type promotion to attract new funds. OK, so you invest 100k and get, say, 110k of notional holdings ... but if the secondary market remains active then your only way out will be through that same secondary market. No-one is going to buy direct at par if they can buy on the SM at 10% off! And as we are seeing now, the ability of the AAs to release funds organically is, shall we say, limited. So your notional 110k is really only worth 100k still, unless the market discount rate changes, so really you're betting on the direction that will take. This looks less and less like a viable product for retail investors. I think it would be better and more honest if AC were able to admit that the AAs are entering a 5 year run down period, and that they found a different way to grease the wheels of the MLA. The Secondary Market for AAs is needed to make this rundown manageable, but I can't see it making them viable in the long term. It is indeed only worth 100k, just like any closed end fund trading at a discount to NAV. It doesn't mean that the discount to NAV can't close. Buying with that discount could be a bet that the discount will close or that it won't, in which case interest reinvestment happens at the same discount, and as it compounds, it may be preferable in the long run.
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ceejay
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Post by ceejay on Jun 18, 2020 22:27:52 GMT
OK, so you invest 100k and get, say, 110k of notional holdings ... but if the secondary market remains active then your only way out will be through that same secondary market. No-one is going to buy direct at par if they can buy on the SM at 10% off! And as we are seeing now, the ability of the AAs to release funds organically is, shall we say, limited. So your notional 110k is really only worth 100k still, unless the market discount rate changes, so really you're betting on the direction that will take. In your example, an investor will enter with 100k (actually, 99k if you want the discount to be assumed at 10%) buying 110k of assets, will stay for a period of time and produce, say 10k interest, then exit at the same 10% discount, realising 108k, so earning a net benefit (assuming that the discount does not change, as in your example). This is exactly the same principle as in any market with, well, market pricing. Well, yes, but look back at the post to which I was replying - which might be taken to read that if you buy at 10% discount then you have somehow magically made 10% instant profit. My principal point was that this is indeed market trading, and that I seriously doubt that this is a viable long term offering suitable for large scale retail investment. Likewise to theta who was I think making a similar point.
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Post by giammy on Jul 7, 2020 21:13:49 GMT
AC hoped to deliver this towards the end of June. They should provide an update on the latest as the blog is still dated 3/6/20
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Post by stuartassetzcapital on Jul 7, 2020 22:43:52 GMT
It is in testing as we said in the last lender bulletin. Everything is progressing well and quickly as is prudent.
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blender
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Post by blender on Jul 8, 2020 6:47:41 GMT
It is in testing as we said in the last lender bulletin. Everything is progressing well and quickly as is prudent. - The 4th largest UK P2P platform, est. 2013 - The original & most experienced property development, bridging and commercial mortgage P2P platform in Europe & UK - £1bn+ lent and over £110m gross interest earned by investors - 1 in every 100 new homes funded by us - Over £1.5bn successfully withdrawn from the Access Accounts- The first and largest property development lender verified by Brismo
That part of your advertising rather adds insult to injury.
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Post by stuartassetzcapital on Jul 8, 2020 7:39:36 GMT
If an investment (vs a bank account which benefits from completely different dynamics) produces unwavering liquidity in say 90% of the cycle and has say 10% of the cycle as relatively illiquid, yet through the entire cycle outperforms cash substantially then that is a laudable aim and a laudable outcome if achieved. To be frank that is close to nirvana surely - that's what our entire business is about seeking to deliver to our investors, we risk warned that was our model and we are now in a cycle to fully test that model, admittedly the worst one for decades/ hundreds of years depending upon where we end up and how you measure it.
This is not a bank account, as we and most others clearly know, and manufacturing and guaranteeing liquidity, as a bank does, comes with an incredible cost to returns. We know exactly what we are doing and will not guarantee liquidity as we believe we can deliver better returns over the cycle as a result.
Everyone was free to take either our intended 90%/10% model with higher target rates or the 100% liquidity bank savings model with lower guaranteed rates. We are now in our 10% phase whilst everyone benefited and banked above average returns and liquidity for the rest of the cycle, and we trust will again.
So in answer to the fair point I think it important to be transparent about the past success and difficulties of a real investment and display the true returns over the cycle and show past examples of how a recession could be expected to affect those returns and liquidity. Signature updated slightly too.
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alender
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Post by alender on Jul 8, 2020 8:09:23 GMT
It is in testing as we said in the last lender bulletin. Everything is progressing well and quickly as is prudent. - The 4th largest UK P2P platform, est. 2013 - The original & most experienced property development, bridging and commercial mortgage P2P platform in Europe & UK - £1bn+ lent and over £110m gross interest earned by investors - 1 in every 100 new homes funded by us - Over £1.5bn successfully withdrawn from the Access Accounts- The first and largest property development lender verified by Brismo
That part of your advertising rather adds insult to injury.
For completeness it should also say over £200m now stuck in Access Accounts.
Also the statement
The original & most experienced property development, bridging and commercial mortgage P2P platform in Europe & UK
Given problems with Loan #227 and #327 and no doubt others, the number non performing property loans in the Access Accounts, the lack of willingness to enforce payments seems rather at odd with the facts.
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Post by bracknellboy on Jul 8, 2020 8:24:29 GMT
That part of your advertising rather adds insult to injury.
For completeness it should also say over £200m now stuck in Access Accounts.
Also the statement
The original & most experienced property development, bridging and commercial mortgage P2P platform in Europe & UK
Given problems with Loan #227 and #327 and no doubt others, the number non performing property loans in the Access Accounts, the lack of willingness to enforce payments seems rather at odd with the facts. I suppose that is one way to completely drive participation of platforms off the forum.
I think the statement is "original....experienced...". Your rather acebic comment is surely about how adept they are at it, or your disagreement with how they are performing that role. Therefore it is not "at odds" at all.
I am no apologist for AC. I withdraw all my money from access some time back (most pre-covid, remaining early on into covid), and sold down all my GBBA (to the extent I could given rump of bad loans including the dire D*** M****) and offloaded a chunk of my MLIA. Since a load of the windmills sadly paid up, I'm left with mostly guff locked in, including oversized exposure to the D*** M**** wind turbine equivalent .
But if you want the platforms to be active participants on here, then best to keep the dialogue polite, appropriate and adult to adult based. Just MHO.
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blender
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Post by blender on Jul 8, 2020 8:27:11 GMT
If an investment (vs a bank account which benefits from completely different dynamics) produces unwavering liquidity in say 90% of the cycle and has say 10% of the cycle as relatively illiquid, yet through the entire cycle outperforms cash substantially then that is a laudable aim and a laudable outcome if achieved. To be frank that is close to nirvana surely - that's what our entire business is about seeking to deliver to our investors, we risk warned that was our model and we are now in a cycle to fully test that model, admittedly the worst one for decades/ hundreds of years depending upon where we end up and how you measure it. This is not a bank account, as we and most others clearly know, and manufacturing and guaranteeing liquidity, as a bank does, comes with an incredible cost to returns. We know exactly what we are doing and will not guarantee liquidity as we believe we can deliver better returns over the cycle as a result. Everyone was free to take either our intended 90%/10% model with higher target rates or the 100% liquidity bank savings model with lower guaranteed rates. We are now in our 10% phase whilst everyone benefited and banked above average returns and liquidity for the rest of the cycle, and we trust will again. So in answer to the fair point I think it important to be transparent about the past success and difficulties of a real investment and display the true returns over the cycle and show past examples of how a recession could be expected to affect those returns and liquidity. Signature updated slightly too. Thank you for making that change. In my opinion it that is not a signature, it is straight opportunist advertising, and must conform to the advertising regulations - as much as what is on the Assetz website. Seldom has past performance been such a poor guide to present and future (unpredictable) performance. Having said that, I consider myself a sophisticated investor and take full responsibility for my investment choices and understanding the risks involved, including keeping too much in Assetz which I had planned to remove as soon as this new tax year started. Neither of us predicted the effect of Covid on us, you on the business, and me on my personal liquidity. I am not suggesting any equivalence in scale - but we all work to rescue our position. Assetz is a good and sound proposition, is well led, and will survive after adjustments. I just need the SM to be there now, just in case I need it urgently. I do not wish to withdraw all my cash.
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Mikeme
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Post by Mikeme on Jul 8, 2020 12:41:16 GMT
SteveT
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SteveT Avatar
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Jun 10, 2018 at 9:57am paul123, ozboy, and 12 more like thisQuotelikePost OptionsPost by SteveT on Jun 10, 2018 at 9:57am
Many lenders used to treat Saving Stream / Lendy loans like an instant access savings product, assuming there'd always be an immediate buyer for anything they sold. The transition from "super liquid" to "seriously constipated" was rapid when lender confidence dipped.
The risk of losing money on QAA / 30DAA investments is undoubtedly much lower but "normal market conditions" should never be relied on if rapid access to funds is critical. The downside of marketing a financial product whose primary feature is instant access (with a commensurately lower rate of interest) is that a large proportion of its investors will be spooked at the first hint of this instant access being jeopardised and will seek to withdraw simultaneously. Thus a transition from "normal" to "abnormal" conditions could take just hours and, if/when this happens, I can't see "normality" being restored for a very long time.
The QAA and 30DAA are excellent for parking cash awaiting investment opportunities elsewhere and for lower risk / lower return investments where ease of access is advantageous. But I wouldn't dream of using them just to make a few extra pounds on time-critical funds. As others have recommended, use an FSCS-protected bank account or NS&I product instead.
Written 2 years ago! £200m is stuck not completely lost. even the Scottish lairds loan, which is a disaster, will repay a reasonable amount. Don't count rotten apples look at the value of the cart.
We gambled our money for better returns than banks. Along came Covid.
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blender
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Post by blender on Jul 8, 2020 18:47:43 GMT
Yes, SteveT was right to suggest that there would be a positive feedback loop, which in financial circles would be called a run. And it is still called a Quick Access Account - quicker than thirty (earth) days. The trouble with COVID is that it has changed the fundamentals for some time as well as the market conditions. I am happy that AC have the best available solution in the SM - it's just that it has taken nearly four months.
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mrsb
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Post by mrsb on Jul 21, 2020 8:53:17 GMT
Yes, SteveT was right to suggest that there would be a positive feedback loop, which in financial circles would be called a run. And it is still called a Quick Access Account - quicker than thirty (earth) days. The trouble with COVID is that it has changed the fundamentals for some time as well as the market conditions. I am happy that AC have the best available solution in the SM - it's just that it has taken nearly four months ................... ............ and still yet to emerge into the daylight. I wonder if this SM is being dangled - but with no intention to deliver it - in the belief that C19 will abate, and "happy days" [NMCs] will return ..... or people awaiting the SM will get bored and think about something else. In my head I've written off my AA holdings; every bit of repayment and interest is "free money" in my head.
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