mikes1531
Member of DD Central
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Post by mikes1531 on Sept 16, 2015 15:03:10 GMT
So why can't it be included in the cash account? : I think it's because the 79% LTV is too high.
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Post by chris on Sept 16, 2015 15:21:46 GMT
That's just not true, did investors get what they asked for in Fl** C** or London Law - if only - those attractive rates are the very desirable ones that will be targeted. Buying unwanted loan units is a completely different thing they will only be able to be flipped at a profit over time as new buyers enter or rates move to make old rates more attractive. What I don't like is the rules being changed part way through the game & simply being imposed, so lenders are left trying to fathom out what game is actually being played. So why can't it be included in the cash account? This isn't a game it's an investment platform. We're not trying to let any one segment get the leg up on another, quite the opposite, and whilst you see this as hampering the MLIA we see it as levelling the playing field with the GBBA and GEIA as they have other disadvantages we wanted to mitigate. The MLIA was given its own set of advantages in the same release. In Fl** C**, London Law, or any other loan where supply is limited you aren't going to get the problem of flippers cornering the market. Every single lender got the exact same opportunity to invest in those loans, with everyone getting an equal slice up capped at their target investment level. That same fairness algorithm was criticised as too complicated, too imbalanced, unfair, etc. when it was launched but has been performing very well ever since with none of the disaster scenarios occurring and has now been copied by another platform.[/quote]
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Post by stuartassetzcapital on Sept 17, 2015 9:32:47 GMT
For the most part going forward it probably wouldn't invest in those loans. The only loans that are going to be over 12% are likely to be those with security that doesn't match the GBBA criteria or really large loans where there's a liquidity premium charged to the borrower so there should be plenty to go around. If there's a monitoring event then it'll pull out of those loans. Yesterday, andrewholgate sidestepped this question and today you have fobbed it off. It creates a very bad impression of Assetz Capital when you deny lenders the chance to invest in loans at 15% or 18%, and cream off over half the interest. You don't need to, the provision fund will build-up almost as fast with the large 10% and 11% loans. "For the most part going forward it probably wouldn't invest in those loans." Lets start going forward now!I cannot see why MLIA wont have access to higher rate loans going forwards - we are building a balanced market not trying to favour one investor type or account over another when factoring everything in.
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Post by Butch Cassidy on Sept 17, 2015 9:40:57 GMT
Yesterday, andrewholgate sidestepped this question and today you have fobbed it off. It creates a very bad impression of Assetz Capital when you deny lenders the chance to invest in loans at 15% or 18%, and cream off over half the interest. You don't need to, the provision fund will build-up almost as fast with the large 10% and 11% loans. "For the most part going forward it probably wouldn't invest in those loans." Lets start going forward now!I cannot see why MLIA wont have access to higher rate loans going forwards - we are building a balanced market not trying to favour one investor type or account over another when factoring everything in. My view is MLIA days are numbered it is already being suffocated by being on the wrong end of weighted distribution algorithms & eventually “ improvements to the investor experience” & “making accounts easier to understand” will mean it is no longer available or perhaps even exists. The standard play book reads build the platform with lenders who want high risks/returns & as demand grows develop the IT systems to cope with larger volume then as demand outstrips supply introduce ever more complicated credit scoring models & IT improvements that can be used to justify why investors need to accept lower returns for better quality loans & finally end up with a black box model that offers fixed (much lower) returns, possibly with a provision fund attached. This is how Zopa transformed, Bondora are currently attempting to do & even FC are heading that way, how long before AC follows – my guesstimate 2-3 years. So why would you now want those initial investors who ask awkward questions, (when not deleted) & remember how good the old days were, when new “stupid ISA money” or institutional funds will accept the new model without question or only very simple requests. As a soon to be shareholder I will benefit but as an investor I will mourn the demise of a great idea.
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Post by stuartassetzcapital on Sept 17, 2015 9:44:18 GMT
If one single factor is selected then each Investment Account will be different yes. However our work is towards maintaining a balanced risk-reward basis for each account and if one factor is different on each of these accounts (such as interest rate) then other factors must compensate. In simple terms this is :
MLIA : highest gross coupon, no Provision Fund and trading buy/sell orders and discounts etc. but requiring quite a bit of time to run
GBBA and GEIA : Mid coupon, Provision Fund, automatic diversification and no time required
QAA : lowest coupon, lowest loan investment exposure (account mostly in cash), Provision Fund, automatic diversification and no time required and a return on spare cash on the platform but capped in size harshly to ensure it does exactly what it says on the tin in most scenarios
There is probably merit as many have suggested in focussing the QAA on giving a return on spare cash on the platform (as originally intended) and creating a new account to give slightly slower access and greater investment level and slightly higher coupon and with no need to cap the account size.
And of course more loans.
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Post by stuartassetzcapital on Sept 17, 2015 9:45:02 GMT
I cannot see why MLIA wont have access to higher rate loans going forwards - we are building a balanced market not trying to favour one investor type or account over another when factoring everything in. My view is MLIA days are numbered it is already being suffocated by being on the wrong end of weighted distribution algorithms & eventually “ improvements to the investor experience” & “making accounts easier to understand” will mean it is no longer available or perhaps even exists. The standard play book reads build the platform with lenders who want high risks/returns & as demand grows develop the IT systems to cope with larger volume then as demand outstrips supply introduce ever more complicated credit scoring models & IT improvements that can be used to justify why investors need to accept lower returns for better quality loans & finally end up with a black box model that offers fixed (much lower) returns, possibly with a provision fund attached. This is how Zopa transformed, Bondora are currently attempting to do & even FC are heading that way, how long before AC follows – my guesstimate 2-3 years. So why would you now want those initial investors who ask awkward questions, (when not deleted) & remember how good the old days were, when new “stupid ISA money” or institutional funds will accept the new model without question or only very simple requests. As a soon to be shareholder I will benefit but as an investor I will mourn the demise of a great idea. There is no plan whatsoever to remove the MLIA whilst investor demand is there for its model (described above).
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Post by Butch Cassidy on Sept 17, 2015 9:52:24 GMT
My view is MLIA days are numbered it is already being suffocated by being on the wrong end of weighted distribution algorithms & eventually “ improvements to the investor experience” & “making accounts easier to understand” will mean it is no longer available or perhaps even exists. The standard play book reads build the platform with lenders who want high risks/returns & as demand grows develop the IT systems to cope with larger volume then as demand outstrips supply introduce ever more complicated credit scoring models & IT improvements that can be used to justify why investors need to accept lower returns for better quality loans & finally end up with a black box model that offers fixed (much lower) returns, possibly with a provision fund attached. This is how Zopa transformed, Bondora are currently attempting to do & even FC are heading that way, how long before AC follows – my guesstimate 2-3 years. So why would you now want those initial investors who ask awkward questions, (when not deleted) & remember how good the old days were, when new “stupid ISA money” or institutional funds will accept the new model without question or only very simple requests. As a soon to be shareholder I will benefit but as an investor I will mourn the demise of a great idea. There is no plan whatsoever to remove the MLIA whilst investor demand is there for its model (described above). Unfortunately it is already dying, as the weighted distribution algorithms are starving it of any loan supply. Until these developments it was possible to reinvest monthly income in existing loans no problem, albeit with random allocations, but now only the odd £1 of shrapnel every few days is invested. I doubt levels of churn have changed very much so these new accounts & the associated weighted algorithms must be the main cause. Perhaps a short term increase in loan drawdowns would ease the pressure but that has long been promised (& I don't doubt being hard worked to deliver behind the scenes) but can you honestly say that supply will keep up or even outstrip demand when ISA &/or institutional money hits in serious volume?
Whilst I don't doubt that you have no plans to remove it - it is pretty impotent if there is nothing for it to invest in.
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sqh
Member of DD Central
Before P2P, savers put a guinea in a piggy bank, now they smash the banks to become guinea pigs.
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Likes: 1,212
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Post by sqh on Sept 17, 2015 9:55:08 GMT
Yesterday, andrewholgate sidestepped this question and today you have fobbed it off. It creates a very bad impression of Assetz Capital when you deny lenders the chance to invest in loans at 15% or 18%, and cream off over half the interest. You don't need to, the provision fund will build-up almost as fast with the large 10% and 11% loans. "For the most part going forward it probably wouldn't invest in those loans." Lets start going forward now!I cannot see why MLIA wont have access to higher rate loans going forwards - we are building a balanced market not trying to favour one investor type or account over another when factoring everything in. What I'm saying is that the highest rate loans are very popular with MLIA investors, and should be excluded from the GBBA. It is very frustrating to see loans paying 12%, 15% or 18% being bought up by the GBBA which pays 7%. I know you need to build up a provision fund, but there are several large loans paying 10%- 11% which will build the provision fund. EG. loans #66, #74, #81, #82, #152, #182 are all appearing in GBBA account listings in small amounts, but they are highly sought after by MLIA investors. You market AC as offering rates of 10% -18%, but the reality is that those of 12% or above are becoming much harder to obtain because the GBBA is hoovering up too many, and it doesn't need to.
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niceguy37
Member of DD Central
Posts: 504
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Post by niceguy37 on Sept 17, 2015 11:25:54 GMT
If one single factor is selected then each Investment Account will be different yes. However our work is towards maintaining a balanced risk-reward basis for each account and if one factor is different on each of these accounts (such as interest rate) then other factors must compensate. In simple terms this is : MLIA : highest gross coupon, no Provision Fund and trading buy/sell orders and discounts etc. but requiring quite a bit of time to run GBBA and GEIA : Mid coupon, Provision Fund, automatic diversification and no time required QAA : lowest coupon, lowest loan investment exposure (account mostly in cash), Provision Fund, automatic diversification and no time required and a return on spare cash on the platform but capped in size harshly to ensure it does exactly what it says on the tin in most scenarios There is probably merit as many have suggested in focussing the QAA on giving a return on spare cash on the platform (as originally intended) and creating a new account to give slightly slower access and greater investment level and slightly higher coupon and with no need to cap the account size. And of course more loans. Firstly let me say that I am a big fan of AC, and a future shareholder. When I started with AC I had access to the primary market, which has now been removed, and presumably there are now underwriting costs that are either reducing AC margins, my interest, or the attractiveness of the rates available to borrowers. I used to have equal access to loan parts as they became available for resale, but now find I'm at a disadvantage. (I previously did not bother much with monitoring when loans were soon to drawdown, then trying to fund my account in time, relying instead on the shrapnelator.) I have negligible interest in buying up distressed or degraded loans at a discount, so this "advantage" is of little use to me. I hardly ever have sufficient information or experience to judge whether the discount is reasonable, and as a higher rate tax payer I am heavily penalised for losses, so it's not for me. The ability to sell at a discount in order to provide liquidity is a great feature, and a definite improvement to AC's model, improving liquidity for urgent exits in return for a modest cost, so I'm glad they've added it back, but don't plan to ever use it. Also I find now as an MLIA investor I'm at the back of the queue for selling. So, as an MLIA lender, I see the "new deal" as a significant step backwards. I've no objection to AC creating a Quick Access Account, but I think they would have done better to have the goal of, say, 90% near instant withdrawal. Then the QAA would not need to steal priority from the MLIA, and when occasional loans were untradeable this would not be a problem. Alternatively the QAA provision fund could buy up any loans unable to trade or without immediate demand.
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Post by chris on Sept 17, 2015 13:22:12 GMT
There is no plan whatsoever to remove the MLIA whilst investor demand is there for its model (described above). Unfortunately it is already dying, as the weighted distribution algorithms are starving it of any loan supply. Until these developments it was possible to reinvest monthly income in existing loans no problem, albeit with random allocations, but now only the odd £1 of shrapnel every few days is invested. I doubt levels of churn have changed very much so these new accounts & the associated weighted algorithms must be the main cause. Perhaps a short term increase in loan drawdowns would ease the pressure but that has long been promised (& I don't doubt being hard worked to deliver behind the scenes) but can you honestly say that supply will keep up or even outstrip demand when ISA &/or institutional money hits in serious volume?
Whilst I don't doubt that you have no plans to remove it - it is pretty impotent if there is nothing for it to invest in.
What on earth are you basing this doom and gloom on? In the most recent loan to draw down the MLIA invested £5 for every £1 the GBBA managed to invest. There's been a general starvation of loan units becoming available across the board which has nothing to do with any algorithms or weightings.
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Post by chris on Sept 17, 2015 13:31:17 GMT
If one single factor is selected then each Investment Account will be different yes. However our work is towards maintaining a balanced risk-reward basis for each account and if one factor is different on each of these accounts (such as interest rate) then other factors must compensate. In simple terms this is : MLIA : highest gross coupon, no Provision Fund and trading buy/sell orders and discounts etc. but requiring quite a bit of time to run GBBA and GEIA : Mid coupon, Provision Fund, automatic diversification and no time required QAA : lowest coupon, lowest loan investment exposure (account mostly in cash), Provision Fund, automatic diversification and no time required and a return on spare cash on the platform but capped in size harshly to ensure it does exactly what it says on the tin in most scenarios There is probably merit as many have suggested in focussing the QAA on giving a return on spare cash on the platform (as originally intended) and creating a new account to give slightly slower access and greater investment level and slightly higher coupon and with no need to cap the account size. And of course more loans. Firstly let me say that I am a big fan of AC, and a future shareholder. When I started with AC I had access to the primary market, which has now been removed, and presumably there are now underwriting costs that are either reducing AC margins, my interest, or the attractiveness of the rates available to borrowers. I used to have equal access to loan parts as they became available for resale, but now find I'm at a disadvantage. (I previously did not bother much with monitoring when loans were soon to drawdown, then trying to fund my account in time, relying instead on the shrapnelator.) I have negligible interest in buying up distressed or degraded loans at a discount, so this "advantage" is of little use to me. I hardly ever have sufficient information or experience to judge whether the discount is reasonable, and as a higher rate tax payer I am heavily penalised for losses, so it's not for me. The ability to sell at a discount in order to provide liquidity is a great feature, and a definite improvement to AC's model, improving liquidity for urgent exits in return for a modest cost, so I'm glad they've added it back, but don't plan to ever use it. Also I find now as an MLIA investor I'm at the back of the queue for selling. So, as an MLIA lender, I see the "new deal" as a significant step backwards. I've no objection to AC creating a Quick Access Account, but I think they would have done better to have the goal of, say, 90% near instant withdrawal. Then the QAA would not need to steal priority from the MLIA, and when occasional loans were untradeable this would not be a problem. Alternatively the QAA provision fund could buy up any loans unable to trade or without immediate demand. Has anyone actually experienced the effect of this in the open market? GBBA / GEIA are going to be targeting their funds at only a couple of loans so sales in others will be unaffected. QAA hasn't sold any holdings yet so no one has noticed the priority there. Underwriter's entire holdings sold out instantly in the recent loan to draw down so again no affect will be seen from prioritisation. The priorities and rankings have been given a lot of thought and we've said that if the market is imbalanced that we'll tweak them. It's not in our interests to disenfranchise any one set of lenders, especially as the MLIA is still our most used investment account. Please give the system a chance in real world usage before assuming it's going to be terrible based on a couple of (probably incorrect) assumptions and writing it off.
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Post by Butch Cassidy on Sept 17, 2015 13:35:03 GMT
Unfortunately it is already dying, as the weighted distribution algorithms are starving it of any loan supply. Until these developments it was possible to reinvest monthly income in existing loans no problem, albeit with random allocations, but now only the odd £1 of shrapnel every few days is invested. I doubt levels of churn have changed very much so these new accounts & the associated weighted algorithms must be the main cause. Perhaps a short term increase in loan drawdowns would ease the pressure but that has long been promised (& I don't doubt being hard worked to deliver behind the scenes) but can you honestly say that supply will keep up or even outstrip demand when ISA &/or institutional money hits in serious volume?
Whilst I don't doubt that you have no plans to remove it - it is pretty impotent if there is nothing for it to invest in.
What on earth are you basing this doom and gloom on? In the most recent loan to draw down the MLIA invested £5 for every £1 the GBBA managed to invest. There's been a general starvation of loan units becoming available across the board which has nothing to do with any algorithms or weightings. The transaction log of my account over the last 22 months, during the early days I even enjoyed buying units at a discount (which was subsequently withdrawn & now is being returned as a significant advantage). Presumably the MLIA is at least 5 times the size of the GBBA, as I assume the majority of MLIA investors would prefer to hold loan 174 @ 10.75% rather than 7%. Is it not true that these new accounts have a preferential buying algorithm?
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Post by chris on Sept 17, 2015 13:44:43 GMT
What on earth are you basing this doom and gloom on? In the most recent loan to draw down the MLIA invested £5 for every £1 the GBBA managed to invest. There's been a general starvation of loan units becoming available across the board which has nothing to do with any algorithms or weightings. The transaction log of my account over the last 22 months. Presumably the MLIA is at least 5 times the size of the GBBA, as I assume the majority of MLIA investors would prefer to hold loan 174 @ 10.75% rather than 7%. Is it not true that these new accounts have a preferential buying algorithm? Yes they have a weighted buying algorithm but that's irrelevant if that doesn't affect you in real world usage. GBBA / GEIA interest in any given loan is always going to be limited. Taking loan 174 MLIA investors still took 5 times as much of the loan as the GBBA, despite this being at a time when the GBBA has been starved of stock and had a weight of cash behind it looking for an immediate home. The investment pattern of the GBBA is typically very different to the MLIA and if you're buying into loans at draw down then chances are you'll get as much as you want (subject to other MLIA demand). Trying to buy into harder to get loans over a longer period of time is where you'll lose out a little, so instead of a 50/50 split with the GBBA in that instance you'll end up with a roughly 2/1 split. In the current market perhaps that'll slow your investment a little bit if that's your primary method of investing funds. However the algorithm is designed around an upturn in sales over the next couple of months as that is what I've been promised by the sales team. In those market conditions I doubt you'd even notice its influence.
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Post by Butch Cassidy on Sept 17, 2015 13:53:40 GMT
Yes they have a weighted buying algorithm but that's irrelevant if that doesn't affect you in real world usage. Trying to buy into harder to get loans over a longer period of time is where you'll lose out a little, so instead of a 50/50 split with the GBBA in that instance you'll end up with a roughly 2/1 split.. We will just have to agree to disagree - I see that as grossly unfair & inequitable but AC clearly don't - I can accept that is a corporate choice. In the current market perhaps that'll slow your investment a little bit if that's your primary method of investing funds. However the algorithm is designed around an upturn in sales over the next couple of months as that is what I've been promised by the sales team. In those market conditions I doubt you'd even notice its influence. Well we can all hope that this upturn in loans comes along soon & as you say perhaps no one will notice but all longer term investors know the track record on this is a little patchy.
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niceguy37
Member of DD Central
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Post by niceguy37 on Sept 17, 2015 14:01:28 GMT
... In the current market perhaps that'll slow your investment a little bit if that's your primary method of investing funds. Well, that was my investment strategy. But if selling at a premium is coming then it's probably not going to be worthwhile for much longer, and I'll have to wait in the DrawDown queue for new loans.
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