Any Loans about to Drawdown

The only Shadow Bid I still have left is Northern Ireland. Haven't heard a thing about this for ages. I wasn't the one the blew over in the resent gales I suppose?

The problem with equal shares for everyone is that it those shares will potentially be very small making it uneconomic to do any personal DD, and without a significant throughput of loans very difficult to build portfolio of any significant size and diversification as large investments are now limited to the very large or very unpopular loans that have large chucks available for investment

The discussion also highlights how different users have different ideas about what they consider as "shrapnel".

samford71 refers to "shrapnel sized amounts less than £1k" - considering as shrapnel amounts that for some users would exceed their entire investment.

For myself, anything smaller than about £10 is "shrapnel", and transactions of a few pence at a time are "dust", and rather annoying.


A better matching algorithm could perhaps allow for users to specify a "minimum transaction size" (so that where relevant, this is arranged to be inversely proportional to the probability of a transaction occurring), and generally arrange for buyers and sellers with larger minimum transaction sizes to be matched to each other and for buyers and sellers with smaller minimum transaction sizes to be matched to each other.

The current system effectively has a £1 minimum transaction size, overridden (allowing smaller transactions) only when a user's entire funded requirement is less than £1. It could be adapted to allow users to enter a minimum transaction size (with a £1 minimum), or to select from a number of pre-determined minimum transaction sizes (perhaps powers of 10 from 0.1 to 1000?).

Someone with a £1000 minimum transaction size would do so in the knowledge that they'll have a very low probability of being included when a loan is over-allocated, but that at least any transaction that does occur will not be "shrapnel"... or they may prefer to tolerate £100 transactions for the better chance of being included, but at least know they won't need to wade through a statement full of hundreds of tiny £10 transactions, etc....

No you are not the only one. I remember making a post many many months back when people were a) moaning about draw down delays and b) proclaiming how they were standing off from participating in this and that initial auction because they would be able to 'pick it up on the secondary market later and avoid deadtime'. I said then i was taking part (not that my bit would make a lot of difference) because I feared that lack of participation from the retail side (large or small) would lead to AC coming to conclusion that their then model was unsustainable/broken and they would have to move to a different model. They have.

I felt then there was a big element of cake and eating it going on. You want security but no draw down delays ? Experience says that is rarely going to be possible. YOu want to get known piece of a loan ? Needs you to be in a first come first served auction, not a post event lottery.

The net of the current situation is that for all intents and purposes deadtime has not  been reduced: if you want to have a high chance of securing a piece of the action for the full duration of a loan you are going to need to hold free cash in your account in the off chance of catching the bow wave as loans become live. And the chances of being binary in/out but in at the size you want, rather than bits of shrapnel, are greatly reduced. You are also much more at the mercy of the speed at which uws want to release their comittment, as opposed to taking them out during the intial auction. 

I sense that the direction of travel of ACs model will, if they stick with it, logically take them on a progression ever closer to a Wellsley/RS model: stated returns with the underlying investments entirely handled by the platform. I think that will be a mistake as it removes a differentiator. 

My investment in AC has been pretty much static now for months. Whereas I had intended to increase it significantly. This is not ACs fault, they may well have offset and more any withdrawl or hold back from prior lenders with new lenders. But its a different model, and probably not what many of this forum really wanted as an outcome I suspect.

I sit on both sides of the fence.   I do think that if only we had an "expected draw down" date then yes, you could have your cake and eat it.  That is minimal deadtime and a decent return..

I will post my ideas as to how I would run AC just as soon as I can get the time to reply to the responses (or PM me and I'll send you them),   I do believe that there is a wonderful middle ground where the vast majority of the population could get a return much better than a bank/building society and have essentially no risk.   There will be massive changes to SIPPs and ISAs very soon - I don';t see anyone better than AC to work with to get the best returns.

IMHO, someone who wanted to obtain large chunks of loans under the old system, and had the time to keep a close eye on the website, would be able to place pre-bids as soon as the loans appeared on the website, and probably would have been able to get what they wanted.  And if they had shadow bidding privileges, their pre-bid would have been converted to a shadow bid automatically when the auction went live, and they wouldn't have had to supply the funds until shortly before drawdown.

The people disadvantaged by the old system were the smaller investors without shadow bidding privileges, who would have been reluctant to place pre-bids because they needed to supply the cash when the auction went live and then had to suffer weeks of idle funds waiting for drawdown.  So they probably didn't bid at all and hoped to pick up parts via the Aftermarket, which meant quite a low chance of picking up a bit of small and/or attractive loans, because those loans would have been fully funded by the investors described in my first paragraph, who probably bid enough that no underwriters were required, meaning that nothing appeared on the Aftermarket soon after drawdown.

Which category of investor someone falls in probably determines whether they think the new system is better or worse than the old one.