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Post by bracknellboy on Jan 3, 2015 20:00:20 GMT
I've previously missed out on the pleasures of Funding Secure but decided its time to dip my toe in (and probably ankle and possibly shin as well).
Bearing in mind that loans are 6 months duration (but that some will be renewed, and some may be paid back early), I'm trying to get a rough feel for the level of average exposure to take to achieve and maintain a sufficiently meaningfully sized position while maintaining a reasonable level of diversification.
Any existing FS lenders able / willing to provide rough indication as to:
1. Approximate number of loans listed per month
2. What %age of listings you tend to take up.
3. What %age are redeemed early, and whether there is any 'normal' as to how early these are redeemed.
4. How consistent is the pipeline (in terms of quantity of listings)
5. What %age of loans are renewed after the initial 6 month period.
Am I also right in saying that there is no secondary / after market on FS ?
Thanks in advance for any inputs.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Jan 3, 2015 21:05:45 GMT
Hi bracknellboy, and welcome aboard  . I've been lending here since a few weeks after launch and the one thing I can say with certainty: there is no norm. The platform has recently been overhauled and is going through a period of fairly rapid expansion just now, with a (regrettable in my opinion) move into property bridges like so many others. However, they have committed to keep the pawn side of things going, so there should still be opportunities there for the forseeable future. I haven't done any stats so can't give the answers in percentages as you requested - maybe others have - but my wordy input to your questions: 1) The number of loans has been rising steadily as the months go by. According to their December newsletter there were 17 new loans in December. There are currently 5 still requiring funding, and 3 in the pipeline. Very small loans that come via their tie-up with a network of jewellers do not get listed in the pipeline, or announced in any way, because they require so few lenders to fulfil them that there is no point. They just appear on the site, get filled and disappear - you either spot them and have money available, or not. I personally don't find any point in hanging around to try and catch them. Lately there have been enough larger loans to satisfy my investment needs. 2) Until recently I probably took up in excess of 95% of the loans available. Now it is much, much less as there are more than enough loans to soak up my funds. I don't participate in the property loans because I want to see how they are handled in the messy end that we all know there tends to be for property loans. Additionally, the messy end being likely, I'd need there to be a secondary market, which there isn't. 3) There have been very few early redemptions in all the time I've been lending here. It may be that as the number of loans increase, the number of early redemptions increases, but it seems unlikely to me - 6 months is a short loan duration in the first place. The few that have occurred are too few to have produced any sort of 'norm'. 4) As said earlier, the pipeline has been steadily growing. 5) A large percentage of (perhaps even most?) loans get renewed. You have the option as to whether to re-participate or not. I used to always renew, but nowadays I'm much more choosy about what I renew and what I don't. Baskets of a number of small trinkets are not likely to get my funds more than once, and perhaps not even the once - depends on the relative values of the items. Yes, as answered somewhere above - no secondary market. It was promised some very long time ago, and I believe it's still something FS wish to provide, but who knows when? (Well, perhaps FS know, but we don't  ). My experience is that they are a very trustworthy, helpful and approachable bunch. As you might expect of me, I don't hold back if there is criticism to be made  , but I've been happy with my investments via FS and their consistently professional approach to, and speed in, resolving any mess that they have ever created, and have no plans to stop investing here. |
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mikes1531
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Post by mikes1531 on Jan 3, 2015 21:54:55 GMT
Yes, as answered somewhere above - no secondary market. It was promised some very long time ago, and I believe it's still something FS wish to provide, but who knows when? (Well, perhaps FS know, but we don't ). I used to agree with ramblin rose's view, but I'm no longer so convinced. A number of months after fundingsecure said on this forum that they they were intending to implement a secondary market, the lack of any further info prompted requests for an update from them. But they've never responded here. And from private email exchanges from them I've got the feeling that the short-term nature of their loans means they don't feel the need for a SM. As long as they can raise all the money they need to satisfy their borrowers' requests, they'll have little incentive to change. Perhaps the current situation, with a number of large, unfilled, loan opportunities might cause a change of mind. Surely the chance of exiting before maturity via a SM sale would encourage more investors. And as evidenced by bracknellboy's OP, new investors would like to have a diversified loan portfolio, and that could be achieved so much more quickly if there was a SM -- investors would start with a larger amount not very well diversified and then use the SM to increase their diversification by reducing their large holdings and making other purchases as loan parts became available. Building a diversified portfolio in the current situation without a SM is a very slow process. In general, FS have been very good at answering the questions I've had, so I really don't understand their reluctance to let us know what happened to their hopes/plans for a SM.
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bugs4me
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Post by bugs4me on Jan 3, 2015 22:25:28 GMT
Yes, as answered somewhere above - no secondary market. It was promised some very long time ago, and I believe it's still something FS wish to provide, but who knows when? (Well, perhaps FS know, but we don't ). I used to agree with ramblin rose's view, but I'm no longer so convinced. A number of months after fundingsecure said on this forum that they they were intending to implement a secondary market, the lack of any further info prompted requests for an update from them. But they've never responded here. And from private email exchanges from them I've got the feeling that the short-term nature of their loans means they don't feel the need for a SM. As long as they can raise all the money they need to satisfy their borrowers' requests, they'll have little incentive to change. Perhaps the current situation, with a number of large, unfilled, loan opportunities might cause a change of mind. Surely the chance of exiting before maturity via a SM sale would encourage more investors. And as evidenced by bracknellboy's OP, new investors would like to have a diversified loan portfolio, and that could be achieved so much more quickly if there was a SM -- investors would start with a larger amount not very well diversified and then use the SM to increase their diversification by reducing their large holdings and making other purchases as loan parts became available. Building a diversified portfolio in the current situation without a SM is a very slow process. In general, FS have been very good at answering the questions I've had, so I really don't understand their reluctance to let us know what happened to their hopes/plans for a SM. Maybe, or hopefully as the platform has just managed to achieve a level of satisfactory robustness then the SM may (eventually) appear one day. I'm aware that in a perfect world lenders/investors should be prepared to run the full term of the loan but individual circumstances change and occasionally that SM could be a financial 'lifesaver'. I'm beginning to wonder whether they have passed the point of having enough funds to satisfy borrowers requests. Certainly the current opportunities, whilst being larger requirements than a few months ago are not filling at the desired rate. Even the couple of smaller ones with loan restrictions are far from 50% filled albeit those smaller ones currently on offer are for significantly more than a £1000 Rolex or what have you. I expect that as a restriction was placed on these then FS were expecting to see a scrum but this has not happened. All platforms need to mature over time and the addition of a SM facility would help alleviate the odd lender/investor concern here and there IMO. It is though these 'extras' that assist in deciding whether to jump in further. Whilst it may be a pain, I'm sure FS could operate a SM albeit as a manual process to begin with to gauge the level of interest. We have though been drumming on about a SM for goodness knows how long so don't hold your breath.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Jan 3, 2015 22:56:59 GMT
Did you Guys and Gals read todays Newsletter? It mentioned seeking some funders for "Larger Investment Opportunities" or people who want to invest £10k or more per loan. Perhaps this is because the current larger loans are sticking?
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Post by bracknellboy on Jan 3, 2015 23:24:03 GMT
Thanks for peep's inputs, though as happens the thread now appears to have strayed a littled off-topic ..... So carrying on with that theme.....one thing I've noticed as a new punter which I put in the 'slightly annoying' bucket is what seem to me to be misleading LTV statements where the loan is an additional tranche. Albeit that the LTV is explained in more detail in the 'information', nonetheless the 'headline' ltv number comes across as a tad misleading. Declaring an LTV as beimg 16.67% based on the loan versus asset might be strictly correct, but given equal ranking to prior tranches takes that to 50% gives the impression (rather unnecessarily) of an attempt to 'polish up'. Maybe its just me.
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Post by mrclondon on Jan 3, 2015 23:29:08 GMT
Not much to add to ramblin rose comments. Bearing in mind that loans are 6 months duration (but that some will be renewed, and some may be paid back early), I'm trying to get a rough feel for the level of average exposure to take to achieve and maintain a sufficiently meaningfully sized position while maintaining a reasonable level of diversification. One complication with that approach is that average exposure is to some extent out of your hands if you are a larger investor as it depends on the mix of loans we are presented with in any given month. Only the largest of the loans have no 24 hour bidding limit, the majority have a limit which can vary between £25 and £1000. Most loans upto a few tens of thousands have been taking between 30 mins and a few (single digit) hours to fill so reading the emails and taking note of loan start times is a must. Some of the bigger loans are split into tranches, so you need to keep your wits about you to tally per borrower exposure, and to be alert to the occaisonal "2nd charge" behind previous tranche(s). But sometimes it isn't obvious that we have multiple loans to one borrower - a fine art collection of paintings by Noah Lubin defaulted recently and will be auctioned in due course, I've just realised there is a 2nd collection of Noah Lubin paintings which may or may not be related. I'll decline the renewal on this 2nd collection just in case (the paintings are hideous anyway ). Do NOT lend on motorbikes in spring / summer as the potential default will be when their cash value dips for winter. There simply isn't enough history to be able to extrapolate, but the defaults to date have been skewed towards the smaller loans (<£1k ) 3. What %age are redeemed early, and whether there is any 'normal' as to how early these are redeemed. A signifcant minority of renewed loans are redeemed "early", often as soon as the one month minimum term on the renewed loan is up. It's as if having to pay the renewal interests & fees acts as a wake up call as to how expensive a finance option this is. |
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mikes1531
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Post by mikes1531 on Jan 4, 2015 2:45:31 GMT
.....one thing I've noticed as a new punter which I put in the 'slightly annoying' bucket is what seem to me to be misleading LTV statements where the loan is an additional tranche. Albeit that the LTV is explained in more detail in the 'information', nonetheless the 'headline' ltv number comes across as a tad misleading. Declaring an LTV as beimg 16.67% based on the loan versus asset might be strictly correct, but given equal ranking to prior tranches takes that to 50% gives the impression (rather unnecessarily) of an attempt to 'polish up'. Maybe its just me. I agree this is a misleading practice that ought not be allowed -- and I think if it were brought to the regulator's attention they'd be rather displeased with the platform. Having said that, though, this problem isn't limited to FS. SS have the same problem, and have been criticised here for it.
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mikes1531
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Post by mikes1531 on Jan 4, 2015 2:55:06 GMT
I'm beginning to wonder whether they have passed the point of having enough funds to satisfy borrowers requests. Certainly the current opportunities, whilst being larger requirements than a few months ago are not filling at the desired rate. Even the couple of smaller ones with loan restrictions are far from 50% filled albeit those smaller ones currently on offer are for significantly more than a £1000 Rolex or what have you. I expect that as a restriction was placed on these then FS were expecting to see a scrum but this has not happened. I wonder whether FS misjudged when setting the limits for the auctions that went live on Saturday because they failed to make any adjustment for the fact that both of these loans are second tranches of existing loans. I have significant positions in both of those earlier loans, so I'm not keen to increase my exposure to those borrowers, so I'm watching those loans from the sidelines. Perhaps I'll put in a token bid so that I can follow future developments. (One of the shortcomings of the fundingsecure platform is that once a loan is made, if you don't have a part of it then it becomes invisible to you.) It will be interesting to see if these loans fill instantly once the restrictions are lifted on Sunday morning. I'd bet that they won't.
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. I've been lending here since a few weeks after launch and the one thing I can say with certainty: there is no norm. The platform has recently been overhauled and is going through a period of fairly rapid expansion just now, with a (regrettable in my opinion) move into property bridges like so many others. However, they have committed to keep the pawn side of things going, so there should still be opportunities there for the forseeable future. I haven't done any stats so can't give the answers in percentages as you requested - maybe others have - but my wordy input to your questions:
).
, but I've been happy with my investments via FS and their consistently professional approach to, and speed in, resolving any mess that they have ever created, and have no plans to stop investing here.
