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Post by valueinvestor123 on Nov 9, 2016 15:38:46 GMT
"I see not additional risk in the 30day/QAA over and above other short-term P2P accounts such as RateSetter Monthly or even Zopa Access. They all invest your money in a pool of loans that you cannot usefully identify in any way, you also cannot choose the loans you invest in and they also all have provision funds protecting them."
The major difference* is that you don't know how much is being invested in loans and how much is being held back in cash at any one time. How the company decides on appropriate cash levels and when. What types of loans it invests in: whether it is short term or long term investments, what maximum amounts are apportioned to each loan or each lending class in stressed scenarios (AC doesn't have as many loans as Ratesetter or Zopa do at any one time so lack of any information on diversification may be a serious issue). Who ranks where in case of bad debts, holding which loans. Moreover, the company has said (correct me if this is wrong) that it engages in short term trading with those loans to facilitate liquidity (I don't believe any other company does this?). The company states that the account is aimed at the more inexperienced investor and I maintain that you have to have much more experience and understanding in order to begin to get your head around this product and judge whether the rate on offer is sufficient compensation for the risks.
Lastly, peer2peer investments are highly illiquid by their nature and most other companies I am aware of, don't try to attempt to mould this fact into something that it cannot be, in their product offerings, through 'clever' modelling which the company said is akin to a 'blackbox'.
But as long as it 'works', I will continue to receive abuse and threats.
*I am not a fan of these models either (though see them as different to QAA) and it looks like Ratesetter may have 'modelled' their assumptions inaccurately, looking at the speed at which the provision fund cover is decreasing.
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Steerpike
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Post by Steerpike on Nov 9, 2016 16:04:41 GMT
Please help me understand this new cash account that Assetz is offering. What exactly does it invest in? From the bits and pieces I read, it seems to spread investments and mentions the word "normal market conditions" many times, which reads like a 'get out' clause. I would like to use it however I don't quite see why it is supposed to be better/less risky than for example keeping 50% of monies invested in p2p at 12% and keeping the other 50% in a government protected bank account (close to 0% I suppose). The reason being that the time when one really needs instant access to cash, market conditions are most certainly not going to be normal! While I am glad that new products are being innovated and offered I am also concerned about the slightly opaque nature of these products, parading as something as low risk, while it may in fact be high risk (anyone still remembers re-packaged mortgages in the US?) More info & thoughts would be welcome as I am trying to get my head around this new account. Thanks! vi123 Perhaps you could save time and heartache and do as you suggested in the first place, i.e. put 50% in high risk investments at 12% and put the rest in the bank.
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adrianc
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Post by adrianc on Nov 9, 2016 16:11:31 GMT
Meanwhile, five days ago...
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n
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Post by n on Nov 9, 2016 16:22:51 GMT
Hi Mods. Technical question. Is there any way I can set a particular thread to be invisible to myself?
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SteveT
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Post by SteveT on Nov 9, 2016 16:28:54 GMT
Hi Mods. Technical question. Is there any way I can set a particular thread to be invisible to myself? Sadly, I believe not (or at least I've never found one). However you CAN block specific members (under the cog in the member's profile) if you find someone particularly tiresome. I believe their posts will then be invisible to you, but I've yet to try.
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Post by valueinvestor123 on Nov 9, 2016 16:29:13 GMT
"although I agree with andrewholgate that it could do with some more publicly available information to provide more investor confidence"
Are you kidding me??
Because that's not the entire point of my thread.
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adrianc
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Post by adrianc on Nov 9, 2016 16:30:29 GMT
Hi Mods. Technical question. Is there any way I can set a particular thread to be invisible to myself? Sadly, I believe not (or at least I've never found one). However you CAN block specific members (under the cog in the member's profile) if you find someone particularly tiresome. I believe their posts will then be invisible to you, but I've yet to try. It still shows the forum and thread as having new posts, though. It just hides the content. Any quoted text is still shown, too.
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kmac
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Post by kmac on Nov 9, 2016 16:34:40 GMT
However you CAN block specific members (under the cog in the member's profile) if you find someone particularly tiresome. I believe their posts will then be invisible to you, but I've yet to try. Done
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Post by chris on Nov 9, 2016 16:46:54 GMT
valueinvestor123 - please can you refrain from the hyperbole as there is useful discussion to be had underneath your exaggerated attacks on the platform that are being lost in the noise. I shall try and address the specific points you raise in your latest post: 1) I'm not sure how you can call that "major difference" of not knowing the cash portion of the account a negative - look at it as if all three accounts have a cash portion but with Zopa Access and RS Monthly that cash portion is always zero whereas the QAA is always aiming to be better than zero. Even if it hits zero you're then in the same place as those other accounts. 2) The total number of loans isn't as relevant as there's another key difference in that the QAA always keeps all investors loan books directly proportional to each other. So if you stick £1,000 into the QAA today it will be diversified at precisely the same level as all other QAA investor holdings across the 152 loans currently in that account. As I understand it that would give you a similar diversification to Zopa, where they do try and diversify over a wide number of loans, and better than RS where they do not diversify to the same degree instead relying upon the provision fund more heavily. Do your own research on both of those options though. 3) All lenders to the QAA at any given point in time rank equally amongst all loans held. 4) The trading Andy referred to was the balancing mechanism used to maintain this equal spread of loans amongst all investors. As far as I'm aware you are right and other platforms do not do this. 5) This account is no more difficult to understand and model than any other P2P offering, including the MLIA or FC or any other manual option, if you want to fully and properly understand whether the rates on offer are sufficient compensation for the risks. It is aimed at simple operation and with the large mitigants of the cash balance and provision fund to simplify most people's reasonable estimate of the risks vs reward. Just as you do not personally look into the details of each and every loan you invest in via the MLIA, as you stated before, and instead judge the risk in aggregate these mitigants are designed to allow others to assess the risks vs reward in aggregate. 6) P2P investments are not universally highly illiquid. Some loans will sell almost instantly due to much higher demand that supply both on AC and other platforms. Whether they offer a QAA style account based upon short term liquidity or not, and I would argue that RS and Z two of the largest platforms both do offer a similar proposition, other platforms such as SS have cultivated plenty of interest from investors based around how liquid their markets are. FC have an entire culture of robots and flippers built around playing games with the liquidity of loans to generate a margin. I've also already highlighted to you that the QAA has priority on the markets when it wants it so it can take 100% of sales of a given loan when it needs to generate liquidity, another significant mitigant.
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Post by andrewholgate on Nov 9, 2016 17:19:55 GMT
However you CAN block specific members (under the cog in the member's profile) if you find someone particularly tiresome. I believe their posts will then be invisible to you, but I've yet to try. Done I wish but alas I need to read all of this to see what is going on.
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n
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Post by n on Nov 9, 2016 17:45:04 GMT
Hi Mods. Technical question. Is there any way I can set a particular thread to be invisible to myself? Sadly, I believe not (or at least I've never found one). However you CAN block specific members (under the cog in the member's profile) if you find someone particularly tiresome. I believe their posts will then be invisible to you, but I've yet to try. Thank you Steve - peace at last (almost) 
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happy
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Post by happy on Nov 9, 2016 18:17:57 GMT
The major difference* is that you don't know how much is being invested in loans and how much is being held back in cash at any one time. How the company decides on appropriate cash levels and when. Why is this in any way a problem? Having a cash reserve structured into an investment product reduced risk, increases liquidity and also enhances the products ability to invest in new investment opportunities. This is exactly the way I structure my SIPP and for similar reasons so to me this makes perfect sense. As to how much in the QAA is in cash I am sure that there are very few investors that would be able to make any meaningful use of any data that could be provided by AC without an intimate understanding of how the AC platform operates and it's transaction volumes etc, something that AC would never reasonably be expected to make public so I feel this is a mute point What types of loans it invests in: whether it is short term or long term investments, what maximum amounts are apportioned to each loan or each lending class in stressed scenarios Well as Andrew described loan types vary and again may represent commercially sensitive information to disclose publicly. Loan term again is a varying feast and anyway with all Zopa and RateSetter products you never know what terms you are buying into anyway. Actually if you compare AC, RateSetter and Zopa I would certainly put RateSetter and Zopa in the P2P for non-sophisticated investors in terms of how they are marketed rather than AC, however these companies products provide almost no information about who you are lending to, it could be a car loan, a BTL, an unsecured SME loan, someone buying a mobile phone or almost anything so how can you make any meaningful judgement on risk. In fact RateSetter and Zopa are free to develop new lending channels to totally different risk categories without any lender ever knowing about it or in fact every being told. If you want to estimate the loans sitting behind the QAA go and pick a random 100 out of the last 200 loans and that should give you a better idea of the underlying risk than you will get on the other plaforms (AC doesn't have as many loans as Ratesetter or Zopa do at any one time so lack of any information on diversification may be a serious issue). Loan diversification obviously has a place in the risk profile and you are right to mention it but as you are investing in a loan pool every investor has the same percentage exposure to each loan. More importantly, the reason loan diversification is so important with RateSetter and Zopa is that most of their loan are unsecured so risk of capital loss on default is very high. AC QAA loans however, as well as having a Provision Fund are all secured loans as well , most on property so you capital risk profile is totally different and does not stand up to comparison with the lending done by RateSetter and Zopa. Who ranks where in case of bad debts, holding which loans. All QAA investors are equal and all have equal rights to asset recovery and PF protection Moreover, the company has said (correct me if this is wrong) that it engages in short term trading with those loans to facilitate liquidity (I don't believe any other company does this?). Why would you think that it would not do this? it would be essential to buy into new loans, increase diversification as the number of loans on the platform increases, spread risk into other asset classes. In all honesty the fact that other companies do not (or more likely cannot) do this is not a negative of AC QAA, it is a positive. The company states that the account is aimed at the more inexperienced investor and I maintain that you have to have much more experience and understanding in order to begin to get your head around this product and judge whether the rate on offer is sufficient compensation for the risks.
As I suggested above, I see the total black box nature of simple-to-use offerings from the like RateSetter and Zopa (which, I would like to point out I also have investments in both these platforms) in predominantly unsecured loans that you will never know the borrower or their risk profile/credit rating, asset class, term, securing assets (or not) etc as far harder to ever understand in terms of where your money is, how at risk is it, when it is likely to come back and so on. I do this for some of my investment and it requires endless spreadsheet manipulation to get just the basic information of what constitutes you loan portfolio. As I said earlier, if you want a good idea of the assets underpinning the QAA, go and look at the loan book as about 50% of the loans there make up the QAA. Lastly, peer2peer investments are highly illiquid by their nature and most other companies I am aware of, don't try to attempt to mould this fact into something that it cannot be, in their product offerings, through 'clever' modelling which the company said is akin to a 'blackbox'.
I was going to describe how liquid most P2P platforms are under normal market conditions and how easy (and cheap!) it is to buy and sell loans but Chris already did that. You can't say the same for the stock market with all the broker fees etc. Many companies do try and shape there offerings to meet different requirements, Zopa do it, Ratesetter do it, LandBay do it, Wellesley do it (I think) where longer-term loans are wrapped into short-term products. But as long as it 'works', I will continue to receive abuse and threats.*I am not a fan of these models either (though see them as different to QAA) and it looks like Ratesetter may have 'modelled' their assumptions inaccurately, looking at the speed at which the provision fund cover is decreasing.Agreed, but bottom line for me on this is this: RateSetter and Zopa are well and truly aiming their products (with the obvious exception perhaps of Zopa Plus) at the novice, unsophisticated user yet I believe these are products where risk is almost totally hidden from all but the most determined of sophisticated lenders. I do not see AC doing that in the same way. Their loan portfolio is there for all to see and the site is littered with warnings about capital risk and I am sure they have taken advice on the strength of the warnings etc to comply with appropriate legislation. Enough said, enjoy your evening.
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littleoldlady
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Post by littleoldlady on Nov 9, 2016 18:29:17 GMT
chris Can you explain the procedure that will be followed when a loan in which the QAA is invested goes 1) overdue, 2) into default, 3) crystallises as a loss. If it is dependent on the size, show it for small, medium and large cases. Bear in mind that there will be continuous inflows and outflows during the progression of the failing loan to its final state. Is it possible that some investors may have more inside knowledge of a failing loan in an intermediate position, for example by holding the same loan in another account (I know that at present they will not know if the loan they hold is in the QAA but you said you were considering changing this, or they may just make a correct guess about it). At what point will investors in the QAA be informed of a failing loan? At what point, if any, would withdrawals from the QAA be halted?
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Post by bracknellboy on Nov 9, 2016 20:10:12 GMT
chris: not quoted as I only wanted a snippet. " I've also already highlighted to you that the QAA has priority on the markets when it wants it so it can take 100% of sales of a given loan when it needs to generate liquidity, another significant mitigant."
Is that clear in the Ts and Cs for e.g. Holders of MLIA, GBBA, GEIA accounts ? This is not something I had realised (but then I've not reviewed Ts and Cs for a long time).
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Post by valueinvestor123 on Nov 9, 2016 23:54:12 GMT
Back from opera and I see that finally there is progress! (of sorts) "please can you refrain from the hyperbole as there is useful discussion to be had underneath your exaggerated attacks on the platform that are being lost in the noise."I will try my best...if you could kindly ask your colleague to abstain from adding up the years of all the AC employees together...It's just...weird and makes me nervous about how other calculations might be performed and why  (this is a joke, in case I am going to be branded 'libellous' again).
"1) I'm not sure how you can call that "major difference" of not knowing the cash portion of the account a negative - look at it as if all three accounts have a cash portion but with Zopa Access and RS Monthly that cash portion is always zero whereas the QAA is always aiming to be better than zero. Even if it hits zero you're then in the same place as those other accounts."
I don't necessarily think it is a negative and didn't call it such a thing. However it is an 'unknown' and knowing how the company may use that cash seems like a basic requirement. With Ratesetter etc, you know you are getting close to 100% exposure to this asset class, through at least thousands of loans, plus the apparent safety of the provision fund, the cover of which is always updated. (In fund management, there are specific mandates: if the manager steps outside of these mandates (for all the best of intentions) he will still get fired because he is doing something that investors are not expecting him to do with their money). Why is it not possible for AC to publish up to date figures of current cash position within the QAA account so that investors can monitor the actual cash position of QAA portfolio??"2) The total number of loans isn't as relevant as there's another key difference in that the QAA always keeps all investors loan books directly proportional to each other. So if you stick £1,000 into the QAA today it will be diversified at precisely the same level as all other QAA investor holdings across the 152 loans currently in that account. As I understand it that would give you a similar diversification to Zopa, where they do try and diversify over a wide number of loans, and better than RS where they do not diversify to the same degree instead relying upon the provision fund more heavily. Do your own research on both of those options though."I think the total number of loans is very much relevant if you are comparing to Zopa/Ratesetter's models as is the size of individual loans: there is simply no comparison as AC has a tiny amount of loans by comparison but some individual offerings are pretty large as a %age of the whole. I wasn't querying so much the proportionality of each investor in each loan (but thank you for confirming) but the potential exposure variation to each loan of the whole account. For example if there is a large offering which AC is not able to fill for whatever reason using traditional methods, could it (in theory) go over 6% in this loan with investors' funds or more? How much more? Is it a good idea for AC to have absolute discretion in this regard? Why is it not possible for AC to publish up to date figures of total exposure of the account to every loan so that investors can monitor how the active funds are being invested??These two features alone would single-handedly remove most of the account-specific worries and provide a fuller picture of the health of the account and then investors can decide and see for themselves whether market conditions are normal or not and act appropriately and at their own risk."Just as you do not personally look into the details of each and every loan you invest in via the MLIA, as you stated before, and instead judge the risk in aggregate these mitigants are designed to allow others to assess the risks vs reward in aggregate."
See above why it is impossible to make any judgement over the 'aggregate'. "6) P2P investments are not universally highly illiquid. Some loans will sell almost instantly due to much higher demand that supply both on AC and other platforms."Liquidity is a bonus, not a given. It exists as long as platforms are providing a market for them and as long as market conditions as well as supply and demand are a certain way. But this is not specific to AC. "I've also already highlighted to you that the QAA has priority on the markets when it wants it so it can take 100% of sales of a given loan when it needs to generate liquidity, another significant mitigant."Yes I don't quite understand this: how can you sell 100% of a loan if nobody wants to buy it? And why does it matter whether it has priority over others or not in this scenario? There is another potential can of worms, that of 'insider trading' in this set up: so AC could (again, in theory) act on sensitive information and sell a loan that they know is defaulting to 'dumb money' (MLIA). Is this what you meant by being able to always find dumb money? I am not sure the potential ramifications of this are being understood by everyone. How can one be sure that everyone is being treated fairly if it is also left entirely up to the discretion of the company? (This is what I meant previously with my comment when I said that I have no idea how QAA activity could be affecting other accounts). Lastly: does AC set their own rates for each loan that QAA invests in? Could it (in theory) decide whether to lower/raise them throughout a lifetime of a loan and how would investors in the MLIA accounts ever know that they might be affected by this? PS: Can I suggest others who are not interested or have nothing to say just not to read the thread instead of posting vacuous comments? PPS: Re-reading this, I do not see how the QAA can be allowed to operate (at least in its current form).
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(this is a joke, in case I am going to be branded 'libellous' again).