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Post by mrclondon on Nov 10, 2013 22:32:51 GMT
I noticed fairly recently the provision fund topped £2m for the first time. Having been in RS since the very beginning when the provision fund was virtually all RS's own seed capital, to see the provision fund become a substantial pot of money despite inevitably being called upon to make good on lates & defaults is quite exciting
But there again a £2m provision fund makes RS rather boring - there is no lender participation other than putting money in and choosing the loan term. Half the howls of anguish on the zopa forum after they introduced a similar but slightly different "Safeguard" fund themselves, related to how boring zopa had become, but they don't know the meaning of boredom, on RS there aren't even any late payments to work up a rage about.
Although I have been running down my Ratesetter book for a while now as I want to be slightly higher on the risk/reward profile than where RS have finally settled, I think its actually pretty exciting that as my first 3 year loans mature, the provision fund with its two million pound coins has helped deliver my money back with exactly the interest I'd hoped for.
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oldgrumpy
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Post by oldgrumpy on Nov 10, 2013 23:37:51 GMT
"the provision fund with its two million pound coins has helped deliver my money back with exactly the interest I'd hoped for."
And long may it continue. I don't care a monkey's banana how boring Ratesetter is - as long as it gives me my 5.7% + or - a bit for the five year income game. I know it needs watching to reinvest at the right rates (only 5.2% currently) but it suits me for that wedge of my savings. That will continue while banks pay less than inflation, while making profits themselves. Can't be bothered with Zopa's 4.3-4.7 maybe rates though. Running that down. FC has annoyed me several times, but I'm still in, and Assetz only needs to improve drawdown times for my "more risky" money. PS..... and anyway, £2M is meaningless, it's the 1.8 x expected default that matters - some say that is too low.
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bugs4me
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Post by bugs4me on Nov 11, 2013 22:59:31 GMT
PS..... and anyway, £2M is meaningless, it's the 1.8 x expected default that matters - some say that is too low. Surely the £2m is growing as the loan book expands? - is that correct or have I got it wrong?
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pikestaff
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Post by pikestaff on Nov 11, 2013 23:09:27 GMT
Surely the £2m is growing as the loan book expands? - is that correct or have I got it wrong? Yes it is. It's intended to stay at 1.8 x expected losses as the book grows. My personal view is this is very adequate, because it's extremely unlikely that disaster would strike overnight. If they see losses rising they can always raise the spread on new loans to keep the fund topped up.
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Post by westonkevRS on Nov 12, 2013 20:24:12 GMT
We aim to be boring, that is an accolade in banking. A fact not recognised by enough bankers. Martin Lewis got it right when he called us the Rory Bremner of P2P lending...
For the record, the aim is to grow the provision fund always. Absolute and coverage, so that it's bullet proof across economic cycles. "Every Lender, Every Penny".
Kevin, RateSetter CRO and P2P Lender
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mikeb
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Post by mikeb on Nov 12, 2013 20:45:18 GMT
We .... Kevin, RateSetter CRO and P2P Lender If you drop a note to one of the moderators, they can upgrade you from "member" to "Ratesetter Staff" to reflect your position (if they haven't noticed already) [Edit] Ah, 'tis done!
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Post by westonkevRS on Dec 21, 2013 15:14:17 GMT
And now it's £2.5 million....
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duck
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Post by duck on Dec 21, 2013 19:21:02 GMT
How boring can you get
Whilst I also invest in riskier loans I note that my investment in RS has been continually growing. Add cash, lend it quickly at decent rates and then minimal micro management ..... fine by me!
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mikes1531
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Post by mikes1531 on Dec 21, 2013 20:09:31 GMT
And now it's £2.5 million.... I see that Zopa's Safeguard Fund is nearly at £2M now, and probably will exceed that level just into the new year. Does anyone know what the Provision fund balance was at the time Zopa started their fund? The underlying questions are which fund is growing faster, and how big are the funds relative to the amount of loans they are protecting -- though perhaps that latter question is irrelevant without also knowing how the two platforms' risk profiles compare.
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Post by westonkevRS on Dec 21, 2013 21:37:08 GMT
Mike,
Our position is simple, as the provision fund has been going from the start and so covers 100% of the lending outstanding balances. We do publish our estimated future provision fund requirement and a "coverage ratio" which (in my opinion) considers the risk profile and amortization of the portfolio prudently. But at the end of the day you as a lender have to have some trust in our ability to get this right and if the coverage is sufficient to cover any variations that might happen in the economic short term (i.e. 2 to 3 years). I can only say we now have over 3 years of experience at RateSetter and so far "every lender every penny".
As for our primary P2P friend it is slightly harder to gauge as their outstanding balance is a mix of SG and non-SG covered. I think it is for them to publish their confidence. Although I think they started with around £500k seed money and it is growing at a similar absolute rate to RateSetter, albeit as a smaller percentage of lending. But I'm only guessing and don't really know (or care that much, in truth).
Kevin.
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bugs4me
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Post by bugs4me on Dec 21, 2013 22:04:22 GMT
Mike, Our position is simple, as the provision fund has been going from the start and so covers 100% of the lending outstanding balances. We do publish our estimated future provision fund requirement and a "coverage ratio" which (in my opinion) considers the risk profile and amortization of the portfolio prudently. But at the end of the day you as a lender have to have some trust in our ability to get this right and if the coverage is sufficient to cover any variations that might happen in the economic short term (i.e. 2 to 3 years). I can only say we now have over 3 years of experience at RateSetter and so far "every lender every penny". As for our primary P2P friend it is slightly harder to gauge as their outstanding balance is a mix of SG and non-SG covered. I think it is for them to publish their confidence. Although I think they started with around £500k seed money and it is growing at a similar absolute rate to RateSetter, albeit as a smaller percentage of lending. But I'm only guessing and don't really know (or care that much, in truth). Kevin. Just stay boring Kevin. My local GP who is also my neighbour asks me from time to time how everything is. I say - fine, all boring stuff. His response is always the same - 'stay that way'
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Post by westonkevRS on Dec 22, 2013 10:37:54 GMT
Bugs,
Why don't you persuade your GP that he needs a RateSetter loan.... Borrowers from the NHS have the best performing loans in our portfolio. ;-)
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bugs4me
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Post by bugs4me on Dec 22, 2013 16:08:13 GMT
Bugs, Why don't you persuade your GP that he needs a RateSetter loan.... Borrowers from the NHS have the best performing loans in our portfolio. ;-) Heavens above, I wouldn't be surprised if the guy didn't even have a Visacard. Think the best he's got is a cheque book & quill pen
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Post by westonkevRS on Feb 6, 2014 18:56:39 GMT
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Post by bracknellboy on Feb 6, 2014 20:16:58 GMT
Who was it said 'pride comes before a fall....' :-) P.S. [NOT with a mod hat on]: Isn't this running perilously close to 'marketing' westonkev ?
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