stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Feb 9, 2018 12:56:21 GMT
I've had 1% from the start and have only three defaults which match all earnings over approx 6 months. I understand they are looking at a new release addressing this. I was wondering if BM would be better if there was a provision fund, which would in effect spread the misery equally on all investors (well ok reduce the overall return). Given that this is black box investment with no ability to pick and choose, so defaults become just a matter of bad luck it makes sense to me I also disagree. The risk of a loan default changes through the life of the loan. What you propose is all investors take all prior investors bad debt and cover it when they make a deposit if I read your proposal right.
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pom
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Post by pom on Feb 9, 2018 13:21:33 GMT
You can't really retrofit a provision fund - if BM were to introduce one it'd have to be with a new separate product.
Another way to even losses out a bit would be the way Goji do it and have monthly bond issues with fixed terms. But again, totally different kind of product with a lot less flexibilty.
Can't have everything!
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shimself
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Post by shimself on Feb 9, 2018 13:39:18 GMT
I wasn't particularly suggesting retrofitting, just suggesting that a better version of bondmason would spread the default risk more evenly. Maybe with a protection fund, or I suppose much smaller tranches than the 1%. But yes if all my loans in a bad state were to fail I would be seeing a loss. I assume that is because I am unlucky, but maybe other people know different?
The only stat I can find is the claim that the average investor is getting 8.96% based on Receivables Purchase Agreements currently available through BondMason, before losses, tax and fees.
The stat that would be more useful is after losses and fees (?tax, wassat?)
Personally looking today I show 356 interest after fees (they call it 8.67%), less 115 watchlist, 260 default, 0 crystallised loss.
I know it's hard to forecast the outcome but WHO HERE WOULD STILL BE AHEAD IF THEIR PROBLEM LOANS WERE ALL TO FAIL?
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Brainer
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Post by Brainer on Feb 9, 2018 15:17:04 GMT
I've been with BM coming up to 1.5 years. XIRR picked up after initial cash drag (as Steve said it would) and has remained slightly above the 7% mark since. However, my Watchlist and Default tabs have become quite full recently, and some of the comments don't sound very positive. A few of these go badly wrong and my XIRR could quickly halve, or worse.
The way I see it, the 1.5% fee we pay is in part for the convenience of not having to self-manage loans but also for BM's supposed expertise in loan selection. I feel like it is going to take years to get a real idea of whether they are living up to the latter part of the equation, and even then, with the p2p industry constantly evolving there's always the risk of 'past performance being no indicator of future performance'. As well as the risk of being one of the 'unlucky ones' who gets more than their fair share of the crystalised losses. I guess my point is: there's an element of blind faith investing with BM, it might take several years to know whether it was a good idea or not.
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zlb
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Post by zlb on Feb 9, 2018 17:04:33 GMT
I wasn't particularly suggesting retrofitting, just suggesting that a better version of bondmason would spread the default risk more evenly. Maybe with a protection fund, or I suppose much smaller tranches than the 1%. But yes if all my loans in a bad state were to fail I would be seeing a loss. I assume that is because I am unlucky, but maybe other people know different? The only stat I can find is the claim that the average investor is getting 8.96% based on Receivables Purchase Agreements currently available through BondMason, before losses, tax and fees.
The stat that would be more useful is after losses and fees (?tax, wassat?)
Personally looking today I show 356 interest after fees (they call it 8.67%), less 115 watchlist, 260 default, 0 crystallised loss.
I know it's hard to forecast the outcome but WHO HERE WOULD STILL BE AHEAD IF THEIR PROBLEM LOANS WERE ALL TO FAIL?
I'm not keen on their offer of fees returned if dissatisfied. You get your fees back, and have to leave the platform. What about fees returned and your can stay with the platform if an investor hit by bad luck? Or do they believe that particular individuals carry bad luck and they'd be happy to see them go?
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Post by stevefindlay on Feb 9, 2018 20:14:33 GMT
Thank you for the interesting discussion.
We are expanding the product portfolio this year. Which will cover a number of the points above.
We now have the scale (16 people / 33 lending partners) and track record to offer some highly complimentary products, all predicated upon diligent and careful lending.
More to follow in the coming months.
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Post by portlandbill on Feb 12, 2018 10:51:43 GMT
I know it's hard to forecast the outcome but WHO HERE WOULD STILL BE AHEAD IF THEIR PROBLEM LOANS WERE ALL TO FAIL?
I'm sorry to say that I'm in that category now, with watchlist (33%) and defaults (68%) now just over my all time earnings.
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kathy
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Post by kathy on Feb 12, 2018 16:58:33 GMT
I know it's hard to forecast the outcome but WHO HERE WOULD STILL BE AHEAD IF THEIR PROBLEM LOANS WERE ALL TO FAIL?
If all my watch list loans and defaults failed to pay my loss would be 150% of interest earned to date 
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zlb
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Post by zlb on Feb 15, 2018 22:02:15 GMT
If defaults increasingly match income, in addition to watchlists being a value way over income, then it seems that the *only* way this platform can work is if defaults are covered by pf types of cover, insured, or legally retrieved from the borrower.
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yangmills
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Post by yangmills on Feb 15, 2018 23:26:05 GMT
Thought I'd update my position on BM after 18 months. My deposits occurred between 1-Aug-16 and 1-Feb-17 and totalled £15k.
Current IRR: 5.87%
Headline rate: 8.66%
Interest earned: £1182.70 (7.88% of notional investment)
Crystallized losses: £210.00 (1.40% of notional investment). Recovery rate of 0%.
Loans in default: £655.04 (4.37% of notional investment)
Loans on watchlist: £935.56 (6.24% of notional investment)
So compared to 6 months ago IRR is almost 50bp higher but total loans with losses or at risk has jumped hugely to 12.00% of notional investment or 152% of interest earned. Now, obviously, I'd hope that most of the loans on the watchlist or in default either to return to performing or recover well. Nonetheless, if I take an instant credit reserve of 10% on those loans on the watchlist/default list (i.e I assume I've lost 10% of the principal) my IRR falls to 5.09%; make that a 20% haircut and it's 4.30%. Moreover, if recovery takes an extended period and I don't recover interest on some loans, my IRR could also be suppressed. Hard to see a loss occurring since would need to see very poor recoveries.
Overall, it's a disappointing result but not a disaster. Don't really feel I'm getting a better result than other "fire and forget" platforms for the 1.5% management fee. Not really seeing yet the added value from loan picking, the diversification benefit from non P2P platforms or economies of scale. Thankfully its only a very small amount of my investment portfolio.
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TheDriver
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Slightly bonkers
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Post by TheDriver on Feb 17, 2018 4:59:54 GMT
8 months since becoming fully invested, and my figures are capital of 67% of interest paid in Default, and 60% on watchlist. Fortunately no Losses so far, and with both Defaults being property-based I'd expect significant recovery eventually if they go south.
So while that snapshot is not entirely rosy, I am not overly concerned and hoping that most of those will return to good health giving me a reasonable return of over 5%.
By comparison, on another secured-loan platform I have loans equivalent to approx 100% of interest received in each of 1, 3 and 6 months overdue category, (ie. repayments of 3 x interest received (and 33% of capital) are overdue), as well as a realised loss of 22% of interest received to date (which was actually more than my interest received at the time, giving an overall annual loss!)
No-one said P2P was going to be serene, but at least defaults seem to (mostly) pay back eventually.
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ton27
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Post by ton27 on Feb 22, 2018 9:51:21 GMT
I realise recoveries can be substantial but for me they need to be so.
I have been invested for over a year with interest earned of nearly £1500. As a percentage of that interest my losses are 5%, Watchlist 107% and Defaults 78% so in total 190%.
No further investments and Bondmason remains on my "Watchlist".
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Post by stevefindlay on Feb 22, 2018 21:34:25 GMT
These statistics are all in line with expectations and performance over the last three years, which has netted out at 8% pa gross return after losses:
- 10-20% onto our watchlist
- 3-5% LGD (loss given default)
- 0.3%-1% write off / realised losses
Our actual loss ratios have been at the lower end of this range: 0.39%
Loan types
To date, the only losses have been on invoice discount and corporate loans.
No property backed loan has lost a penny so far. Although these are more likely to go onto our watchlist.
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keith
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Post by keith on Feb 25, 2018 5:46:50 GMT
Is it possible to add the facility of downloading one’s loan portfolio in excel or csv? It would make keeping tabs on these a lot easier.
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zlb
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Post by zlb on Mar 8, 2018 20:42:35 GMT
These statistics are all in line with expectations and performance over the last three years, which has netted out at 8% pa gross return after losses: - 10-20% onto our watchlist - 3-5% LGD (loss given default) - 0.3%-1% write off / realised losses Our actual loss ratios have been at the lower end of this range: 0.39% Loan types To date, the only losses have been on invoice discount and corporate loans. No property backed loan has lost a penny so far. Although these are more likely to go onto our watchlist. Hi, whilst this is reassuring if it is a stable situation, and "netted out" means net return after crystallized loss, could you explain what the two factors of this sentence means, on the watch list. Perhaps it's clear to some, but not me. Thanks. 1. "A winding up petition against the company is being prepared and the loan is being pursued". 2. "The debt is credit insured."
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