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Post by Deleted on Jan 23, 2015 7:53:01 GMT
Hi,
I only started investing with Assetz Capital over this week, but I can provide an initial review.
My initial take is: there is clearly a shortage of supply, either new loans coming to the aftermarket, or people selling their holdings. Basically, there is a market, but it's very small, and cannot really absorb new investments of a few thousand pounds, unless investing in fewer than 10 of loans only.
50% of my cash is now invested in only 9 loans, 8% of my cash in 21 loans (very small amounts), and basically 42% of my cash not invested and earning nothing (which I will take out if still the same in a week's time).
I have set investment targets on 60 loans out of 78 currently available on the platform. 29 loans with targets are not getting a single penny invested.
A good diversification method would be to have investments spread over 50 even loans, to reduce the risk of losing more than 2% of my cash.
However, given the lack of market activity and new supply, this is simply not possible. I understand the loans are secured, but having to invest 10% of my cash on individual loans, just to get 58% of my cash invested, is a bit worrying.
Maybe the best investment strategy on AC is to load only a few hundred pounds of cash every week, at most.
With only a new loan coming on board per week, and I am assuming the demand/large number new investors coming in, the market imbalance is only going to get worse, unless existing investors get an incentive to sell their loans.
S.
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bigfoot12
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Post by bigfoot12 on Jan 23, 2015 8:58:06 GMT
welcome to AC @sebtomato,
You have joined at a particularly slow time for AC. They have introduced a new system, changed the way things work a bit, and Christmas holidays didn't help. I'd guess you are right in suggesting one new loan a week, but with very few over Christmas it has been worse than that recently.
I am not surprised that some of your targets have no investment, some seem to be very tightly held, I have had targets set in some for months with nothing (or a few pence only) purchased.
It is worth persisting a little longer. As new loans come along you will find that people sell other loans to buy the new one so you should see an increase in activity in some of the existing loans.
One final point, I agree that I would want at least 50 loans to be diversified. And you must do what makes you comfortable but as I lend on other P2B platforms as well as AC I don't worry about having 50 loans on each platform; on AC at the moment I am invested in 31 loans.
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is
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Post by is on Jan 23, 2015 10:22:06 GMT
The nature of AC supply is much more lumpy than some other platforms, but the security (& recovery track record) mean that personally I find it much easier to place larger sums here than say FC, given that I am OK with bigger concentrations for these loan types. Here I'm OK with six-figure amounts invested in individual loans, at yields higher than FC equivalents (property loans at 7% after fees). No markup though means liquidity in higher coupon loans is constrained, though hopefully this will change soon.
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Post by chielamangus on Jan 23, 2015 10:22:31 GMT
@sebtomato AC is not FC and I see no reason to seek the level of diversification (max 2 per cent) you want. Nor do I think a max of 10 per cent in any one investment is a good rule. These loans are secured, and some are better than others. It is worthwhile to spend more time on analysing each investment and make an objective decision not constrained by arbitrary diversification targets. You could have all your money invested immediately if you chose, and you could then gradually increase the level of diversification.
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Post by Deleted on Jan 23, 2015 11:33:14 GMT
Yes, there may not be the need to have the same diversification between loans, when those are secured.
However:
1) Some loans have a second charge only on some assets. Some assets are houses, so valuation could be questionnable etc. I think there is a difference between valuation, and ability to recover the full amount at short notice (or a fraction of the amount by discounting the asset)
2) I believe AC has not lost anyone any money so far, but still expects to lose 0.15% overall, so therefore the loans are not 100% secure. 0.15% x millions is still a significant amount for some people to lose. If the valuation was conservative, and security confirmed, why not 0% losses?
3) I think diversification is required between platforms. If you get a "site not found" error one day, you will appreciate! What's happening in that case, and several loans defaulting at the same time? Who is recovering the money and paying the legal fees? How do you prove what you have lent and what you are due back?
Regarding the efficiency of the aftermarket:
a) Some loans will be repaid, and I am not sure there is sufficient pipeline to replace those (so imbalance of demand/supply)
b) The new loans in the pipeline seem to have a relative low interest rate compared to some existing ones, so I can't see current investors switching to those, and therefore selling their previous investment
Maybe I joined at a specific slow time, but I think AC probably needs a lot of deals in the pipeline to satisfy investors, or work on how to balance demand and supply (when reselling loans, so having a variation on price)
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bigfoot12
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Post by bigfoot12 on Jan 23, 2015 12:28:41 GMT
1) Some loans have a second charge only on some assets. Some assets are houses, so valuation could be questionnable etc. I think there is a difference between valuation, and ability to recover the full amount at short notice (or a fraction of the amount by discounting the asset) 2) I believe AC has not lost anyone any money so far, but still expects to lose 0.15% overall, so therefore the loans are not 100% secure. 0.15% x millions is still a significant amount for some people to lose. If the valuation was conservative, and security confirmed, why not 0% losses? b) The new loans in the pipeline seem to have a relative low interest rate compared to some existing ones, so I can't see current investors switching to those, and therefore selling their previous investment. Taking your point b first. I think that the loans in the pipeline look higher than many existing ones. I expect that 10% is close to the recent average. Many of the loans you can see at 15% and 18% have some sort of impairment and are accruing default interest. Unlike some other platforms these are still available in the secondary market. Risk free in the UK currently pays about 1% (out to five years), so we have to accept some sort of risk to earn 9-10%, and I certainly agree with you that there is a difference in quality between many of the loans on offer.
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sqh
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Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Post by sqh on Jan 23, 2015 14:01:08 GMT
Yes, there may not be the need to have the same diversification between loans, when those are secured. However: 1) Some loans have a second charge only on some assets. Some assets are houses, so valuation could be questionnable etc. I think there is a difference between valuation, and ability to recover the full amount at short notice (or a fraction of the amount by discounting the asset) 2) I believe AC has not lost anyone any money so far, but still expects to lose 0.15% overall, so therefore the loans are not 100% secure. 0.15% x millions is still a significant amount for some people to lose. If the valuation was conservative, and security confirmed, why not 0% losses? 3) I think diversification is required between platforms. If you get a "site not found" error one day, you will appreciate! What's happening in that case, and several loans defaulting at the same time? Who is recovering the money and paying the legal fees? How do you prove what you have lent and what you are due back? Regarding the efficiency of the aftermarket: a) Some loans will be repaid, and I am not sure there is sufficient pipeline to replace those (so imbalance of demand/supply) b) The new loans in the pipeline seem to have a relative low interest rate compared to some existing ones, so I can't see current investors switching to those, and therefore selling their previous investment Maybe I joined at a specific slow time, but I think AC probably needs a lot of deals in the pipeline to satisfy investors, or work on how to balance demand and supply (when reselling loans, so having a variation on price) Welcome on board Sebtomato. I think you already have an accurate assessment of the aftermarket. It is difficult is ascertain how many loans are being repaid in the near future, but there are more repayments planned than new loans in the pipeline. Diversification is important for another reason. Well secured loans can get locked in "investment paused" mode because repayments are late. I have been unable to access 20% of my portfolio for months, because it is locked in "investment paused" loans due to late repayments. I have full confidence that AC will recover those late payments but it makes liquidity a real problem. Most of that 20% was in high demand when they were paused.
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mikes1531
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Post by mikes1531 on Jan 23, 2015 20:34:54 GMT
Most of that 20% was in high demand when they were paused. Probably because investors looked at the high interest rates on these loans -- these borrowers probably were behind in their payments -- and assumed that AC would be able to recover all the capital and accrued interest eventually. But that was early days in AC's existence. I'm still hopeful that AC will achieve good recoveries, but I now have a much better appreciation of what is involved when a loan goes into default and how very long the process takes. I -- and I expect other investors -- now have a much reduced appetite for non-performing AC loans, so I expect the Aftermarket in parts of future loans in a similar position may be a lot less active. Having said that, though, there'll be a steady inflow of new investors who won't have the benefit of this experience, and they may do the same as early investors did. So anything is possible!
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bugs4me
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Post by bugs4me on Jan 23, 2015 22:41:17 GMT
Most of that 20% was in high demand when they were paused. Probably because investors looked at the high interest rates on these loans -- these borrowers probably were behind in their payments -- and assumed that AC would be able to recover all the capital and accrued interest eventually. But that was early days in AC's existence. I'm still hopeful that AC will achieve good recoveries, but I now have a much better appreciation of what is involved when a loan goes into default and how very long the process takes. I -- and I expect other investors -- now have a much reduced appetite for non-performing AC loans, so I expect the Aftermarket in parts of future loans in a similar position may be a lot less active. Having said that, though, there'll be a steady inflow of new investors who won't have the benefit of this experience, and they may do the same as early investors did. So anything is possible! I do feel that AC has matured as a platform along with many lenders/investors. It's very easy IMO just to look at the LTV and headline rate. Personally I try and do as much DD as possible before jumping in especially regarding the individual borrowers. It does take more time and there's no guarantees that my judgements will be correct but at least I feel more comfortable. There were a couple of loans that I was involved with which I sold on the AM after doing that DD. Bit like cart before horse but at least I was able to extract myself from them - lesson learned as trading in both of them is now suspended. I hope AC can retrieve the position but I'm not hopeful and have mentally written off a couple of hundred £'s in accrued interest due. Whilst I agree that diversification is important it is equally important to be able to 'manage' the loans that lenders are involved in. So I try and cherry pick - as I'm sure most lenders do - but to a smaller number with possibly a higher investment in each. The one area where I'm still confused about is the GEIA. On paper it sounds a nice passive investment vehicle but my concern is over any exit strategy if required. This is an area which I do not feel has been fully explained by AC. There are posts on other threads where units are not being sold - are they simply being lumped into an already overcrowded WT AM or given preferential treatment although it doesn't feel as though they are. So @sebtomato use your own best judgement and also many of the posts contain highly invaluable advice. Just feel comfortable with whatever you decide. Just my ramblings 
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Post by andrewholgate on Feb 7, 2015 23:10:16 GMT
Anyone who knows me and anyone who has heard me speak will know I am pragmatic.
For the record, to date no-one has lost a penny on AC but I do not guarantee that you won't. I've been a lender for nearly 20 years and know that lending is not risk free.
Security will enhance recovery, but it doesn't guarantee no losses.
If anyone believes that I or AC have said otherwise, please let me know where we have said so.
Andrew
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Post by Deleted on Feb 8, 2015 8:09:31 GMT
I think the issue with AC is lack of possible diversification, and expected losses perceived to be only around 0.17%. See www.crowdfundinsider.com/2014/10/51337-assetz-capital-shares-defaults-losses-2013-2014/A very low number, but given how difficult it is to trully diversify an investment on AC, due to the lack of new loans coming on board, and very inactive second market (at least for good loans with good rates), it's difficult for an investor to diversify properly (e.g. investment in 100 equal loans), unless they invest small amounts very progressively. Therefore, if the expected losses are at 0.17% for the platform (Assetz can confirm the latest forecast), an individual wouldn't lose 0.17%, but probably more like 5% if they can only spread their investment over 20 equal loans (a realistic number), and if none of the loan can be recovered. I don't think it would be possible today to invest £100 or more on 50 equal loans (parts), and that it is only to diversify a fairly small total investment of £5,000, with a reduced risk of 2% if one loan cannot be recovered. My conclusion: when/if a full loss happens, the actual loss for some investors could be much higher than the platform number quoted by Assetz. Assetz needs to bring more loans, and free-up the aftermarkets, by allowing for instance people to sell loan parts for a premium (as other platforms do). Just to clarify, I do like the AC platform: the website itself works well and is clear, the rates are good, information displayed for each loan is clear, and all loans have security (and no losses so far). However, the biggest issue currently (based on my own limited experience over the last 4 weeks) is the low volume of investment opportunities, and therefore possible diversification. Hopefully, it can be resolved, and maybe I just joined at a slow time. EDIT: I found the official number/rate from AC www.assetzcapital.co.uk/key-investor-information/defaults-and-losses/"In the current market we estimate future default rates to be circa 1.5% and Expected Loss across a diversified portfolio of loans to be circa 0.5%." |
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spockie
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Post by spockie on Feb 8, 2015 9:12:04 GMT
You have joined at a slow time, as did I, joining in December 2013. However, I am now invested in around 65 loans. I have no losses, although I did participate in some of the distressed loans. I'm expecting a hit sooner or later, but you know that when you invest in P2P. Set your targets on the loans you want, and you'll get there over time. Just needs a bit of patience.
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bigfoot12
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Post by bigfoot12 on Feb 8, 2015 11:57:14 GMT
I think the issue with AC is lack of possible diversification, and expected losses perceived to be only around 0.17%. See www.crowdfundinsider.com/2014/10/51337-assetz-capital-shares-defaults-losses-2013-2014/A very low number, but given how difficult it is to trully diversify an investment on AC, due to the lack of new loans coming on board, and very inactive second market (at least for good loans with good rates), it's difficult for an investor to diversify properly (e.g. investment in 100 equal loans), unless they invest small amounts very progressively. Therefore, if the expected losses are at 0.17% for the platform (Assetz can confirm the latest forecast), an individual wouldn't lose 0.17%, but probably more like 5% if they can only spread their investment over 20 equal loans (a realistic number), and if none of the loan can be recovered. I don't think it would be possible today to invest £100 or more on 50 equal loans (parts), and that it is only to diversify a fairly small total investment of £5,000, with a reduced risk of 2% if one loan cannot be recovered. My conclusion: when/if a full loss happens, the actual loss for some investors could be much higher than the platform number quoted by Assetz. Assetz needs to bring more loans, and free-up the aftermarkets, by allowing for instance people to sell loan parts for a premium (as other platforms do). Just to clarify, I do like the AC platform: the website itself works well and is clear, the rates are good, information displayed for each loan is clear, and all loans have security (and no losses so far). However, the biggest issue currently (based on my own limited experience over the last 4 weeks) is the low volume of investment opportunities, and therefore possible diversification. Hopefully, it can be resolved, and maybe I just joined at a slow time. EDIT: I found the official number/rate from AC www.assetzcapital.co.uk/key-investor-information/defaults-and-losses/"In the current market we estimate future default rates to be circa 1.5% and Expected Loss across a diversified portfolio of loans to be circa 0.5%." I agree with spockie. You have joined at a quiet time. Over the last year there have been times when there have been lots of activity and times when it has been quieter. Your start coincided with a quiet time and with Christmas. Several directors have said that they expect a significant increase over the next two months, and I believe them. When this happens not only will these loans be available in good size, but also lots of the older loans will be available as underwriters sell out to free cash, and existing investors sell some to diversify. In November and early December there were some decent sized pieces (£10k+) on the after market, in addition to large amounts which were never seen as they went straight into the accounts of those with targets. But some loans I have bought less than a few pounds even though I have had a target set for many months.
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agent69
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Post by agent69 on Feb 8, 2015 13:31:38 GMT
Like many others I am sitting with bated breath in anticipation of the loan flood gates opening.
In the mean time I'm just chugging along picking up bits on the SM. Only one I can't get any of (despite months of trying) is No 8 - JR
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Post by Deleted on Feb 8, 2015 13:31:57 GMT
Yes, must be a quiet time. Hopefully, there will more loans soon, as some will also come to an end.
Probably about 50% of the loans I have set targets against just have holdings of a few pounds, despite some cash being available most of the time.
My conclusion, from my first few weeks of investing with AC, is that it's probably worth setting a target against all loans available (77 active now), but the target may only be fulfilled fairly quickly for about 30 - 40% of those loans. The rest will slowly increase by a few pounds each week, assuming cash is available.
Also, people should probably only invest if they are willing to keep their money invested for the remaining duration of the loan (e.g. 24 months), as some parts are not selling at all on some loans (typically 10% interest rate or less), so it's impossible to get out (nor to discount the parts).
Therefore, I am careful with this now: unless the interest rate is good (and therefore parts can find buyers quickly if sold), I won't invest too much on loans with too many remaining months.
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