Mikeme
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Post by Mikeme on Oct 12, 2020 14:16:59 GMT
I think there needs to be a distinction between the professional higher net worth investor and the retail investor which you have indicated there are large numbers with modest investments. The latter are more interested in getting a modest income albeit at a higher risk than the banks. That type of investor will increase if negative interest rates come about. As long as the income keeps arriving that's all that matters. The secondary market now gives those that urgently need the money a way out.
The average retail investor doesn't have the knowledge to use MLA and as advised shouldn't invest more than 10% in P2P. They would however expect to see the PF working!
rates around the 4% mark will become attractive again when we are sure that the economy gets better and asset valuations are in the right ball park.
I know there will be talk about the loans where valuations and realisations were AWFUL in some of the now defunct AA's but in the remaining 3 accounts with the risk so spread have little effect on returns.
As always only my opinion!!!
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ian
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Post by ian on Oct 12, 2020 15:41:42 GMT
I think there needs to be a distinction between the professional higher net worth investor and the retail investor which you have indicated there are large numbers with modest investments. The latter are more interested in getting a modest income albeit at a higher risk than the banks. That type of investor will increase if negative interest rates come about. As long as the income keeps arriving that's all that matters. The secondary market now gives those that urgently need the money a way out. The average retail investor doesn't have the knowledge to use MLA and as advised shouldn't invest more than 10% in P2P. They would however expect to see the PF working! rates around the 4% mark will become attractive again when we are sure that the economy gets better and asset valuations are in the right ball park. I know there will be talk about the loans where valuations and realisations were AWFUL in some of the now defunct AA's but in the remaining 3 accounts with the risk so spread have little effect on returns. As always only my opinion!!! One issue is that we have already had signal the PF will be in part pulled. Already investors in the forerunner to the AAs, the GBBA are expected to suffer capital losses, how long before funds can no longer be Ring Fenced and an algorithm invests funds in default loans.
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Post by Badly Drawn Stickman on Oct 12, 2020 17:05:21 GMT
What are people's thoughts on the AA rate of returns when factoring in that the target rate pays on the gross investment, not the discount rate, and also how the discount should be factored into the total rate of return and over what period. And compare / contrast to MLA investment and its returns and no provision fund coverage. Would be interested in people's thinking especially given the wish to invest at modest exposure per loan and the hundreds of loans in the AAs. Imagine you are talking to a small child with a low attention span in your reply..... Are you asking if investing in the access accounts at the current interest rate with the current discounts is a more sensible option than self selecting loans?
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upperdeane
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Post by upperdeane on Oct 12, 2020 17:11:17 GMT
What are people's thoughts on the AA rate of returns when factoring in that the target rate pays on the gross investment, not the discount rate, and also how the discount should be factored into the total rate of return and over what period. And compare / contrast to MLA investment and its returns and no provision fund coverage. Would be interested in people's thinking especially given the wish to invest at modest exposure per loan and the hundreds of loans in the AAs. Hi Stuart My issue is not so much about the rate in AA at the moment - i think that is fair in todays current climate tbh - for me its more about being able to liquidate funds from AA - I don't necessarily mean take money out out of AC. To be honest I would prefer to have my entire AA money now in MLA right now as that seems less restricted and you can be selective and more in control than AA's and overall discounts to exit aren't as bad if circumstances change and you need to. To me it seems crazy to take a 6%+ haircut currently (has been higher) just to move it into MLA.
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dead-money
Rocket to the Moon
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Post by dead-money on Oct 12, 2020 18:34:52 GMT
What are people's thoughts on the AA rate of returns when factoring in that the target rate pays on the gross investment, not the discount rate, and also how the discount should be factored into the total rate of return and over what period. And compare / contrast to MLA investment and its returns and no provision fund coverage. Would be interested in people's thinking especially given the wish to invest at modest exposure per loan and the hundreds of loans in the AAs. Without details on the underlying loans in the AA (as has been outlined and requested previously by other forum members) investing in the AA feels a bit like putting money into a lottery without knowing the odds of success. Without this info I am not comfortable investing.
I spent some time at the weekend attempting to crunch numbers of the Access accounts and the amount of capital loss to be expected. My conclusion; we haven't a FFF'ing clue ! Even my most optimistic numbers suggest the current ~6.4% discount isn't enough for new money. If you want to dispute that, please show your working...
Until such time as Assetz Capital publish regular, i.e. monthly, updates on the Access accounts, ring-fencing, provision funds, likely futue tranche funding, possible capital revaluations, writedowns, defaults. Perhaps employ an auditor to provide an independent fair valuation quarterly?
I for one will not be adding money to the Access accounts. Currently I'd be buying a cat in a bag!
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dead-money
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Post by dead-money on Oct 12, 2020 18:43:55 GMT
I'm trying to deploy more funds from my P2P pot (referred to by my other half as my P'ing pot) as I've increased it due to a recent inheritance. I'd like to increase my AC exposure, but find it impossible to do so without breaking my own rules on max per loan. I mainly invest in the MLA and find that the steady flow of repayments combined with the lack of new loans is forcing me to concentrate my funds over fewer and fewer loans. I've already broken my rules on a few loans to take advantage of some discounts. I have invested recent funds in the Access Accounts when discounts were in double digits, and would do so again if they returned to this level, possibly even at 9ish%. For me, I feel that's the right level of discount given the current extremely slow access at par and a small premium for PF risk. In the past I've used these accounts for my readily accessible funds, with full understanding that the accessibility was not guaranteed and was therefore not to be relied upon. I also used GS, LW and Loanpad for the same purpose. So, I now find myself very overweight in Loanpad as my last bastion for what I perceive to be lower rate, fairly secure, and readily accessible funds. I've recently been deploying some of these funds in my higher risk platforms with highly active SMs. It's an alternative way of achieving the accessibility, but at a higher risk than I would really like. At this rate I will soon be forced to drawdown from AC rather than increase. I have the same problem, as cash becomes available from interest and capital repayments I'd like to redeploy but I have learnt from bitter experience not to break my max per loan. Loans that look good suddenly give a very nasty surprise when least expected. Don't break your own rules, you'll regret it, it's just a matter of when, not if. Consequently most of my repayment cash is withdrawn. It hurts to put it in a ~1% interest account but at least it's FSCS. Plus one on this!
My MLA holdings are reducing as the good ones repay, there's nothing else worth investing in live or in the pipeline; so the choice is either increase holdings in the remaining rump or withdraw and invest elsewhere. My aggregate AC investment has halved since March as a result. Perversely I actually bought AC convertible shares with some of it, as they pay 8% pa. Since the introduction of lender fees my MLA holding returns have dropped from 8.1% to 7.2%.
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dead-money
Rocket to the Moon
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Post by dead-money on Oct 12, 2020 18:45:38 GMT
What are people's thoughts on the AA rate of returns when factoring in that the target rate pays on the gross investment, not the discount rate, and also how the discount should be factored into the total rate of return and over what period. And compare / contrast to MLA investment and its returns and no provision fund coverage. Would be interested in people's thinking especially given the wish to invest at modest exposure per loan and the hundreds of loans in the AAs. Imagine you are talking to a small child with a low attention span in your reply..... Are you asking if investing in the access accounts at the current interest rate with the current discounts is a more sensible option than self selecting loans? ELI5, No it's not, pig in a poke...
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Post by Badly Drawn Stickman on Oct 12, 2020 20:39:11 GMT
Imagine you are talking to a small child with a low attention span in your reply..... Are you asking if investing in the access accounts at the current interest rate with the current discounts is a more sensible option than self selecting loans? ELI5, No it's not, pig in a poke... Wanted to make sure I had interpreted correctly,I assume he had a reason for asking. Whilst a pragmatist would not invest in either that's probably an awful lot easier when you don't already have any like me. I suppose I can see the current position is beyond AC's direct control (I am not saying they were great before, I only have others views to go on) but nobody seems to be blaming them for the pandemic which is clearly a fairly key player. I may have an opinion, but thought it worth checking the opinion matched the question. EL15 is slightly lost on me, always follow the advice in my above post with me.
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star dust
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Post by star dust on Oct 12, 2020 21:01:47 GMT
ELI5, No it's not, pig in a poke... EL15 is slightly lost on me, always follow the advice in my above post with me. ELI5 ~ Explain Like I am 5 (years old) ~ small child with low attention span?
Although acronym's for 5 year olds are probably not apropos.
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dead-money
Rocket to the Moon
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Post by dead-money on Oct 12, 2020 21:05:26 GMT
ELI5, No it's not, pig in a poke... Wanted to make sure I had interpreted correctly,I assume he had a reason for asking. Whilst a pragmatist would not invest in either that's probably an awful lot easier when you don't already have any like me. I suppose I can see the current position is beyond AC's direct control (I am not saying they were great before, I only have others views to go on) but nobody seems to be blaming them for the pandemic which is clearly a fairly key player. I may have an opinion, but thought it worth checking the opinion matched the question. EL15 is slightly lost on me, always follow the advice in my above post with me. "Explain Like I'm Five."
For any new money, buying in there's a discount price that moves and is quite volatile. So you might gain or lose far more on the discount price than you'd earn on the notional interest rate over a few months or years.
What you are being asked to invest in is an opaque product with assets of an unquantified value determined by an interested party with inside knowledge, rather than an independent auditor or open market valuations. The rules of how that product behaves can be rewritten at any time without notice, as we have seen in recent months and could well be rewritten again in the future.
So Pig in a poke, cat in a bag; a product of unknown value which you can't determine prior to purchase and once you've bought it there's no willing seller to buy it off you for the price you paid!
For those who already have a collection of bags with cats therein, the difficulty is in extracting some return by selling it on to another party without being gouged or scratched too badly in the process. Do we write-off eighteen months or more interest in order to exit from the situation or do we hold onto the bag in the hope it's a pedigree pussy cat rather than an scrawny alley cat?
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Post by Badly Drawn Stickman on Oct 12, 2020 21:14:45 GMT
Wanted to make sure I had interpreted correctly,I assume he had a reason for asking. Whilst a pragmatist would not invest in either that's probably an awful lot easier when you don't already have any like me. I suppose I can see the current position is beyond AC's direct control (I am not saying they were great before, I only have others views to go on) but nobody seems to be blaming them for the pandemic which is clearly a fairly key player. I may have an opinion, but thought it worth checking the opinion matched the question. EL15 is slightly lost on me, always follow the advice in my above post with me. "Explain Like I'm Five."
For any new money, buying in there's a discount price that moves and is quite volatile. So you might gain or lose far more on the discount price than you'd earn on the notional interest rate over a few months or years. What you are being asked to invest in is an opaque product with assets of an unquantified value determined by an interested party with inside knowledge, rather than an independent auditor or open market valuations. The rules of how that product behaves can be rewritten at any time without notice, as we have seen in recent months and could well be rewritten again in the future. So Pig in a poke, cat in a bag; a product of unknown value which you can't determine prior to purchase and once you've bought it there's no willing seller to buy it of you... For those who already have a collection of bags with cats therein, the difficulty is in extracting some return by selling it on to another party without being gouged or scratched too badly in the process. Do we write-off eighteen months or more interest in order to exit from the situation or do we hold onto the bag in the hope it's a pedigree pussy cat rather than an scrawny alley cat?
I got the pig bit, just struggled with the acronym. Thanks.
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Post by Badly Drawn Stickman on Oct 12, 2020 21:17:10 GMT
EL15 is slightly lost on me, always follow the advice in my above post with me. ELI5 ~ Explain Like I am 5 (years old) ~ small child with low attention span?
Although acronym's for 5 year olds are probably not apropos.
Not my strong point. I'm sure people spend more time trying to work them out than is ever saved in typing them. OTMJBM
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garfield
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Post by garfield on Oct 12, 2020 21:38:03 GMT
ELI5 ~ Explain Like I am 5 (years old) ~ small child with low attention span?
Although acronym's for 5 year olds are probably not apropos.
Not my strong point. I'm sure people spend more time trying to work them out than is ever saved in typing them. OTMJBMYou've just made that up! hlndadveiuokjflju to you too!! 
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Post by Badly Drawn Stickman on Oct 12, 2020 21:48:02 GMT
Not my strong point. I'm sure people spend more time trying to work them out than is ever saved in typing them. OTMJBMYou've just made that up! hlndadveiuokjflju to you too!! Have not. clearly that's 'Or that may just be me' What you got with yours?
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garfield
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Post by garfield on Oct 13, 2020 6:49:30 GMT
You've just made that up! hlndadveiuokjflju to you too!! Have not. clearly that's 'Or that may just be me' What you got with yours? Let me give that some thought...
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