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Post by chris on Jan 31, 2016 16:37:06 GMT
They're both percentages of the loan units held, so QAA is a bit bigger at the moment. Which will grow quicker is likely to be a complex function of how quickly the accounts grow, as the more they grow the smaller the provision fund will be in relation to the total investments but also the more funds will be paid into them which will overcome any temporary fluctuations from having to pay out.
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Post by Ton ⓉⓞⓃ on Jan 31, 2016 20:35:25 GMT
They're both percentages of the loan units held, so QAA is a bit bigger at the moment. Which will grow quicker is likely to be a complex function of how quickly the accounts grow, as the more they grow the smaller the provision fund will be in relation to the total investments but also the more funds will be paid into them which will overcome any temporary fluctuations from having to pay out. When/If a PF reaches 5% will the excess spill over from that one fund and then help to fill any other underfilled PF's of other accounts?
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Post by chris on Jan 31, 2016 20:47:18 GMT
They're both percentages of the loan units held, so QAA is a bit bigger at the moment. Which will grow quicker is likely to be a complex function of how quickly the accounts grow, as the more they grow the smaller the provision fund will be in relation to the total investments but also the more funds will be paid into them which will overcome any temporary fluctuations from having to pay out. When/If a PF reaches 5% will the excess spill over from that one fund and then help to fill any other underfilled PF's of other accounts? Up to us at that point but it's something we could do.
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kermie
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Post by kermie on Jan 31, 2016 23:01:59 GMT
Hmm, I'd be careful with that one chris - it cuts both ways. AC could go either way (pool the resources, or keep them ring-fenced) - but if the "excess" from one PF topped-up another, then you'd need to be clear whether or not they are still ring-fenced (if they ever were?) if and when any of their funds are called upon in the event of default. |
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mikes1531
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Post by mikes1531 on Feb 1, 2016 4:17:32 GMT
Hmm, I'd be careful with that one chris - it cuts both ways. AC could go either way (pool the resources, or keep them ring-fenced) - but if the "excess" from one PF topped-up another, then you'd need to be clear whether or not they are still ring-fenced (if they ever were?) if and when any of their funds are called upon in the event of default. : AIUI, if a PF ever reaches its target, the surplus goes to AC to do with as they wish. If, having extracted a surplus from one PF, they were to decide to be generous and use that money to make an ex gratia contribution to another PF, they could do that -- in the same way that they gave the GEIA PF a kick-start with a contribution when they first introduced the PF concept. (They might have done the same with the PFs for the GBBA and QAA but, if they did, they did it so quietly I was unaware of it at the time -- or now, for that matter.) Since any such contributions are at AC's discretion, they probably could maintain that the individual funds are -- and always have been -- ring-fenced, and not be setting any precedents with any future contributions.
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KoR_Wraith
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Post by KoR_Wraith on Feb 1, 2016 15:15:24 GMT
Didn't want to make a new thread for this simple question:
How is prefunding allocated at AC?
Does it work on the latest SS model of giving an average amount to most investors, does it work out allocations based on a % of your bid, etc?
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Post by chris on Feb 1, 2016 17:23:27 GMT
Didn't want to make a new thread for this simple question: How is prefunding allocated at AC? Does it work on the latest SS model of giving an average amount to most investors, does it work out allocations based on a % of your bid, etc? Just to make sure there is no confusion there is no prefunding (or primary / secondary market). There is just one market and when a loan is drawn down it is placed in that market and lenders buy / sell instructions are executed. The market uses (pioneered) a similar allocation system to that used by SS on their sub £1m loans. Each lender interested in investing in a loan is allocated an equal amount of that loan, and where that is more than the lender wants to invest that excess is split equally amongst other lenders. This system is used every time anyone sells any part of a loan. So there is no fastest finger first, no having to watch loans for activity, no gaming the system by setting targets much higher than your desired investment level, etc. With some loans we do control the market a little more, primarily the green loans that our Green Energy Investment Account can invest in. This is simply because there have been so few loans for that account recently leading to a lot of pent up demand, and the flow of loans in the future is also likely to be a much smaller than with the other accounts. In those loans we specifically allocate parts of the loan to the different investment accounts, so the manual account may be allocated £100k whilst the GEIA is allocated £200k. We have two wind turbines due to draw this month and both those loans will be allocated in that way.
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KoR_Wraith
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Post by KoR_Wraith on Feb 1, 2016 23:31:59 GMT
The market uses (pioneered) a similar allocation system to that used by SS on their sub £1m loans. Each lender interested in investing in a loan is allocated an equal amount of that loan, and where that is more than the lender wants to invest that excess is split equally amongst other lenders. This system is used every time anyone sells any part of a loan. So there is no fastest finger first, no having to watch loans for activity, no gaming the system by setting targets much higher than your desired investment level, etc. Thanks for that. Are you able to provide an approximate figure that an individual investor may be allocated at initial drawdown for eg. a £200k loan? Obviously every loan has a different level of demand but broadly speaking would a £1k allocation on such a loan be unusually high? Would £300 be more 'normal'? I'm trying to gauge the amount of idle funds I should have available as the upcoming batch of loans becomes available.
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Post by Ton ⓉⓞⓃ on Feb 1, 2016 23:42:23 GMT
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KoR_Wraith
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Post by KoR_Wraith on Feb 1, 2016 23:58:50 GMT
Looking through the referenced thread it seems my £300 suggestion is a bit optimistic! Idle funds adjusted accordingly...
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Post by Ton ⓉⓞⓃ on Feb 2, 2016 0:11:40 GMT
Looking through the referenced thread it seems my £300 suggestion is a bit optimistic! Idle funds adjusted accordingly... The very first post of the thread has a chart, something like "Max. allocation". Check that out.
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ilmoro
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Post by ilmoro on Feb 2, 2016 0:23:41 GMT
Looking through the referenced thread it seems my £300 suggestion is a bit optimistic! Idle funds adjusted accordingly... Unfortunately, there are so many variables it is almost impossible to predict. The last loan #224 was very small but few lenders set/had chance to set targets, it was a low rate, a start up & a 2nd charge so allocations were large £900. Prior to that, where I have figures, the last half dozen loans, allocations have been less than 0.2% on loans c200-300k @9-10% rate. I think allocations on the non-BTL will probably be c£300, BTLs probably slightly more as the rate isnt great, the bridging loan is new territory as not had a loan that size. However, the big elephant in the room is how much is actually released to MLIA lenders. As my figures are against total loan size they will be distorted by AC only making 33% availiable to MLIA lenders as has happened on many of the recent loans (dont have figures for most of those) which potentially means actual allocations are around .5% . Hopefully AC will indicate predrawndown how much will be released to MLIA. Here's the scatter graph of the actual allocations vs loan size 
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Post by bracknellboy on Feb 2, 2016 6:53:24 GMT
Being a tad over enthusiastic for 224 ? Are you deliberately omitting that "it was a restaurant" could be added to the list of things in its favour ? 
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Post by chris on Feb 2, 2016 11:11:06 GMT
The market uses (pioneered) a similar allocation system to that used by SS on their sub £1m loans. Each lender interested in investing in a loan is allocated an equal amount of that loan, and where that is more than the lender wants to invest that excess is split equally amongst other lenders. This system is used every time anyone sells any part of a loan. So there is no fastest finger first, no having to watch loans for activity, no gaming the system by setting targets much higher than your desired investment level, etc. Thanks for that. Are you able to provide an approximate figure that an individual investor may be allocated at initial drawdown for eg. a £200k loan? Obviously every loan has a different level of demand but broadly speaking would a £1k allocation on such a loan be unusually high? Would £300 be more 'normal'? I'm trying to gauge the amount of idle funds I should have available as the upcoming batch of loans becomes available. For individual loans once I know the allocation (i.e. £x will be sold at draw down) I can give you a precise figure. Based on recent history £300 would be on the low side for all but the smallest loans or those with exceptional demand. The next wind turbine will be heavily weighted towards the green account so MLIA allocation will be around the £600-700 per lender region (based on current funded demand), however most will be over £1k and the bigger loans it will be into the tens of thousands. The £6m loan drawing this Friday will let you buy pretty much whatever you want, although we do have several HNWs looking to hold large chunks for the long term. We have a huge pipeline of loans now that will be drawing down over the next couple of months so I expect the per lender allocations to steadily increase back to where most lenders get everything they ask for.
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KoR_Wraith
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Post by KoR_Wraith on Feb 2, 2016 14:34:03 GMT
Thanks to all for the helpful responses.
Final question: what happens if big loans like the one on Friday take an extended period of time to fill (or possibly even fails to fill?). Many platforms don't pay any interest until a loan has been fully filled, slightly concerned that a large bid could sit earning 0% for some time or be refunded with no gains if unfilled.
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