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Post by mrclondon on Jul 25, 2015 14:36:58 GMT
mrclondon what do you think of the AC Green fund, at 7% with a provision fund? Do you worry that these funds will be severely tested over a normal economic cycle? A provision fund built up from a well-diversified and large enough book of loans should be capable of withstanding the impact of normal economic cycle, including random external influences to the UK economy. Not least the funding requirements for such a provision fund are capable of being adjusted if the coverage ratio starts to look iffy. The W&Co fund suffers from lumpy underlying loan sizes and a strong bias towards property security - it could well be be the first to be stressed. Transparency varies widely between the provision funds, and I far prefer the RS model of the fund continuing to grow ad-infinitum than say the SS or AC model where the provision fund is capped at 2% or 5% respectively of current loan values. The AC GEIA provision fund suffers from a couple of flaws if stress tested - relatively few but large loans (similiar to SS) meaning one total failure could wipe out the fund, and secondly the systemic risk that all the loans are to one basic asset class. The level of transparancy of the AC GEIA provision fund is arguably the worst of all the major players, but mitigated by the fact that all the loans are available for non-provision fund investmants so we will have oversight of the fact the fund is being drawn down.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jul 25, 2015 14:50:07 GMT
Mclondon you are very very right. Couple queries can one really manage 200 plus loans? Just to do the initial d.d. on the loans would take forever. I agree on a.c. I would have to lower my comfort requirements just to be able to pick up enough loans. Why has there been so little reference to lend i.? Appreciate you have too much exposure to property but maybe more then half of loans on a.c. seem to be property loans? With lend i. its easy to earn 7.5 percent before capital losses. (None so far for me. ) I also avoid most loans on t.c but when I find one I like to go in on a big way. Whereas with a.c. I get feeling more like f.c. and just do autobid or sorta autobid. What about funding K? Or more of just the same. FK smaller version of FC, bit better at communicating but still largely non-asset secured. Have you looked at savingstream, property backed loans @12%, simple site, v. liquid market, limited provision fund, only issue is current structure (lend to platform) but the much promised trust structure is allegedly finally imminent. Bit of a tendency to extend loans but as interest is always covered not a huge issue particularly with liquid SM. One default fully recovered quickly.
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Post by mrclondon on Jul 25, 2015 15:04:10 GMT
Mclondon you are very very right. Couple queries can one really manage 200 plus loans? Just to do the initial d.d. on the loans would take forever. I agree on a.c. I would have to lower my comfort requirements just to be able to pick up enough loans. Why has there been so little reference to lend i.? Appreciate you have too much exposure to property but maybe more then half of loans on a.c. seem to be property loans? With lend i. its easy to earn 7.5 percent before capital losses. (None so far for me. ) I also avoid most loans on t.c but when I find one I like to go in on a big way. Whereas with a.c. I get feeling more like f.c. and just do autobid or sorta autobid. What about funding K? Or more of just the same. Due dilligence becomes quicker the more you do it as you develop a gut feel for what doesn't meet your criteria after just a quick glance. Most TC listings I can rule out in less than a minute just by reading the summary tab and not bothering to download the IP. The Current Esk**** loan took about five minutes to rule out on 85% LTV second charge (B loan) with significant flood risk. I am though recently retired, and hence finding the time to manage a large loan book isn't a major issue for me. To give you a feel for my loan book I'm currently split: 134 AC+TC+SS 140 MT+FS 121 W&Co (assuming between my 4 chunks of money I'm in all current loans) 92 FK (mostly un-secured but incl 2 x property and 3 x wind turbines) I've also probably still got well over a hundred FC loans although I've been running down that loan book for 18 months now. The problem with creating a sensible p2p diversification strategy is the per loan max contribution can be lower than your own per loan exposure limit so the failure of a bigger loan part needs a lot of smaller loan parts to cover. Lend Invest - until recently their minimum was £10k per loan which doesn't fit with my diversifactaion strategy, now its down to £1k I should probably give them some consideration, particularly when the W&Co investments start to mature at the end of this year as their current rates are too low for my taste.
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upland
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Post by upland on Jul 26, 2015 20:02:09 GMT
I think much better to call in the receivers right away. Say I invest £100. Now there is issue with planning permission and property looses 30 percent of value. I would still be covered as loan to value ratio is 70%. Let us say I still lost a further 10 percent of the capital for receivership fees etc. Had a receiver been appointed 7 months ago (after the initial one month of 'discussion') a total of 7 months would have been saved. Meaning that though now though I have only £90 pounds of my initial investment I would have been able to reinvest at 0.0083% per month and hence back up to £95. First loss is the best loss.. no need to drag it out. I find this 'approach' concerning to me as an investor as it drags out the financial uncertainty. Where can I find the current default rates on Assetz Capital site? In terms of loans in default, a fair few. In terms of lost capital, I think I'm right in saying that any losses predicted have yet to be crystallised (can anyone correct me?), so nothing as yet, but there are some forecast to represent a loss of varying degrees. #146, #57, #41, #35 initially spring to mind. There is no on-site stats on defaults other than in individual loan details. I think that there is just not enough consistent history to make any sensible statistics as yet with AC. Even FC are changing a lot and their defaults must be changing all the time. There was mention on the AC website of some default stats a while ago. I asked about it but I think that the mention has gone away.
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bababill
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Post by bababill on Jul 26, 2015 20:02:26 GMT
Mclondon you are very very right. Couple queries can one really manage 200 plus loans? Just to do the initial d.d. on the loans would take forever. I agree on a.c. I would have to lower my comfort requirements just to be able to pick up enough loans. Why has there been so little reference to lend i.? Appreciate you have too much exposure to property but maybe more then half of loans on a.c. seem to be property loans? With lend i. its easy to earn 7.5 percent before capital losses. (None so far for me. ) I also avoid most loans on t.c but when I find one I like to go in on a big way. Whereas with a.c. I get feeling more like f.c. and just do autobid or sorta autobid. What about funding K? Or more of just the same. FK smaller version of FC, bit better at communicating but still largely non-asset secured. Have you looked at savingstream, property backed loans @12%, simple site, v. liquid market, limited provision fund, only issue is current structure (lend to platform) but the much promised trust structure is allegedly finally imminent. Bit of a tendency to extend loans but as interest is always covered not a huge issue particularly with liquid SM. One default fully recovered quickly. When I looked at savingstream long long time I felt they were too small.. just noticed they put to 46 million traded so they must have grown a lot. Still not happy with the issue of lend to platform... will wait till thats fixed.
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upland
Member of DD Central
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Post by upland on Jul 26, 2015 20:11:15 GMT
mrclondon what do you think of the AC Green fund, at 7% with a provision fund? Do you worry that these funds will be severely tested over a normal economic cycle? A provision fund built up from a well-diversified and large enough book of loans should be capable of withstanding the impact of normal economic cycle, including random external influences to the UK economy. Not least the funding requirements for such a provision fund are capable of being adjusted if the coverage ratio starts to look iffy. The W&Co fund suffers from lumpy underlying loan sizes and a strong bias towards property security - it could well be be the first to be stressed. Transparency varies widely between the provision funds, and I far prefer the RS model of the fund continuing to grow ad-infinitum than say the SS or AC model where the provision fund is capped at 2% or 5% respectively of current loan values. The AC GEIA provision fund suffers from a couple of flaws if stress tested - relatively few but large loans (similiar to SS) meaning one total failure could wipe out the fund, and secondly the systemic risk that all the loans are to one basic asset class. The level of transparancy of the AC GEIA provision fund is arguably the worst of all the major players, but mitigated by the fact that all the loans are available for non-provision fund investmants so we will have oversight of the fact the fund is being drawn down. I think that if you want something that has a reliable and resilient outcome then one should engineer that thing and not another. I feel that it is using the green card to be seen as a good place to be when it really needs proper diversification.
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upland
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Post by upland on Jul 26, 2015 20:22:52 GMT
93 active loans and out of that 17 are ‘investment paused.’ I don’t see how I can make this site work for me unless I micromanage it. Even then the odds seemed stacked against it…I am not good at flipping loans; FC never worked for me either... I take a contrarian view to perhaps the majority of lenders on p2p platforms, most of whom won't have discovered this forum and the advice within it. I expect capital losses to the extent I expect to make no more than 6% after losses over an economic cycle.
The rates of 9 to 13% typical of secured asset lending (AC, TC, SS, FS, Abl) with risk of capital losses should be compared to those platforms with strong provision funds (RS, ZP, W&Co) with rates of less than 6%, and in some cases substantially less depending on loan term. The extra yield you are getting at AC etc is to compensate you for future capital losses. Also worth noting the long run yield after losses at FC on a fully diversified portfolio is around 6.5%. Any yield over 13% implies a much elevated risk of capital loss. I avoid a few loans I consider to be higher risk (just a few loans on AC but most loans on TC) - usually due to weaker than average security, but beyond that the strategy is diversification both between platforms and between loans on a platform. Flipping loans is the wrong strategy IMO, as that is implying a fixed level of diversification, far better is when the free cash for investing has been exhausted to sell part of a loan holding to diversify into a new loan. Its a simple decision - is a yield of 6% after losses worth the effort of managing a portfolio of an absolute minimum of 200 loans ? For me it is, as I'm overweight in property, already have a substantial amount in equities via my SIPP, and I'm not keen on bonds. Its interesting to reflect upon what long term returns are in the various markets. They are often less than you think unless you have a special edge. I do wonder that we are a little seduced by these great headline rates especially as this particular game is so very new. A steady 6% return is realism.
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Post by whitmanthecat on Jul 26, 2015 20:38:00 GMT
A steady 6% return is realism. Actually, it wouldn't necessarily be a steady 6%. There could be a number of ups and downs along the way, much as with other investment types. But the end result would be as if you could invest at a steady 6%. (As you mention long term returns I think this is what you mean)
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