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Post by chielamangus on Jun 3, 2014 9:08:27 GMT
I posted some comparative returns a month ago just for information. I've done the same exercise for the month just ended and the results are in the table below. But this time I need some help because I cannot understand one of the results. Perhaps someone here can provide an explanation:
| FC | AC | RS | W | To end April
| 6.77 | 7.50 |
|
| To end May
| 7.92 | 8.15 |
| 5.44 |
| XIRR
| XIRR
|
| AER
| "Official" return
| 6.5 |
| 4.6 | 5.44
| Average term
| 3-4 years
| <12 mths
| 3years
| 18 mths
|
The results cover varying periods. In the case of FC it is almost a year. With the others it is about 5 months. The first line of results was reported last time and is included here just for easy comparison. The FC return was boosted in May by secondary market sales at a premium, so I don't expect that return to be maintained, especially as a few loans have been downgraded. The AC returns have improved mostly, I believe, because of the shadow bid system which prevents too much money being tied up waiting for drawdown. The Wellesley returns have changed slightly just as a result of the changing composition of my portfolio. But the mystery for me is the return from RS which "officially" is 4.6 per cent (the weighted average of my portfolio) but was actually 2.58 per cent.. So what is the explanation? I'm darned if I know, and I consider myself quite numerate. I might have to contact RS direct about this but I thought I'd see what the savvy people here thought first. All suggestions gratefully received! Added August 7th: Have deleted some of the above because it was inaccurate/stupid depending on how you want to label it. Put simply, I had included one year bonds in the RS calculation and of course there was no interest from those in the period under review. I will make a new post for more recent (and correct) figures. |
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pikestaff
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Post by pikestaff on Jun 4, 2014 13:38:44 GMT
Have you tried valuing your opening and closing RS portfolios cum interest, just to see what happens? If you are still way off the expected number then something is up.
To do the valuation you would need to copy and paste the opening and closing "Your money on loan" reports into Excel and do some data manipulation to calculate the accriued interest. Unfortunately the downloads have to be done in real time, so if you do not have them it cannot be done.
PS: I have just done my RS numbers for the period 2/5/14 - 4/6/14 the simple way, without accrued interest, and got pretty much what I expected (XIRR 5.38% vs weighted average from closing portfolio download 5.57%). Nothing suspicious there. All my RS funds are in the 5 year market.
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Post by chielamangus on Jun 10, 2014 7:40:54 GMT
Have identified one factor affecting my RS return. However, too busy at present to check it out. Will report back when I do.
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Post by chielamangus on Aug 7, 2014 11:57:20 GMT
I have corrected my previous post from June 3, and here are the latest performance figures - just for information, so that members have something to compare their own performance with. Summer being a busy time I never did any assessment last month and it was only a wet day recently that allowed this update to be done.
| FC
| AC | RS | W | | To end May | 7.92
| 8.15
|
|
| | To end July | 7.62
| 9.67
| 5.7
| 5.55
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| XIRR
| XIRR
| XIRR
| XIRR
| | "Official" return | 9.4
|
| 5.77
| 5.69
| Average term (yrs)
| 2.5
| 1
| 4.7
| 1.8
|
Comment: FC return has declined slightly as defaults have increased - and the number of downgraded loans is queueing up. FC's official return has shot up - presumably due to secondary market sales and there is a time lag before this is reinvested and starts earning again from my perspective. AC gives the best financial return and is also more liquid than the others. RS and W provide a similar (lower) return but require much less work on my part. W is excellent in this respect, and it does not tie money up for the same lengthy time as RS. Although W's rates are now lower (I am locked in at the higher rates) they are still mostly better than RS for loans of similar length. Best buys? For me, AC and W. |
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pikestaff
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Post by pikestaff on Aug 8, 2014 8:19:21 GMT
Updating my XIRR figures from an earlier post in another thread p2pindependentforum.com/post/11472/threadAC 8.04% (was 7.11% to end April) Heavy impact of dead time, but showing significant improvement now that I have a shadow account and it is easier to pick up loans in the aftermarket. FC N/A (was 5.68% to closure in February) Dead time and some losses. After-tax XIRR 4.12% assuming 20% tax paid last week of January after end of tax year. Effort/reward ratio not for me. RS 5.16% (was 4.94% to end April). All in 5 yrs. My headline average is now 5.6%, but it was much less than this because I timed my entry badly, when rates were around 5%. Slowly improving as I've added/reinvested at higher rates. The effect of dead time and the exclusion of accrued interest from the accounts balance is somewhere around 0.2-0.3%. TC 8.67 9.20% (was 7.32% to end April) Difference from headline average of 10-11% entirely down to dead time and the exclusion of accrued interest from the accounts balance. 3 reasons for improvement: proportionately less dead time, rates increasing, a couple of cashbacks. No losses yet... Which sort of explains why I still like TC despite their poor communications. Edit: I forgot to correct for a peculiarity in TC's accounting for cashbacks. Now done. See also my post below re accrued interest at AC and TC. |
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pikestaff
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Post by pikestaff on Aug 19, 2014 8:52:33 GMT
The AC figure in my previous post excluded accrued interest. I've just re-done the figure to date, adding accrued interest on my loan units to the closing balance. This gives a XIRR of 10.35%, which I'm very happy with.
I was surprised what a big difference the accrued interest makes, but I shouldn't have been. My accrued interest is just under 0.9% of my closing balance (partly because of some loans with interest paid at maturity), and it's a much higher % of my average balance because I've only been in AC for just over a year, and I started small.
I must try to do the same for TC, although it's harder because they don't give you the numbers. I'm pretty sure the TC adjustment will be smaller.
Edit: I have done the same for TC using an estimate of accrued interest, because they don't give the numbers. The XIRR rises to 9.67%, which is a smaller adjustment than for AC.
So AC is now looking better than TC. Food for thought, but it's worth noting that this is historical data. Rates on TC are edging up whereas those on AC are edging down. Also, I am wary of putting too much into property loans.
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spiral
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Post by spiral on Aug 19, 2014 10:26:19 GMT
I take daily snapshots of the balance I have with each provider which enables me to calculate the interest received today and compare that to my balance 1 month earlier in order to calculate my monthly return. I then add this up for the 12 previous months to get my annual return.
The biggest problem with this method is the 1 month figures get a little skewed when investing new sums as most loans don't repay back until 5-8 weeks after being taken out thus the this month figure is distorted downwards and next months is distorted upwards but over 12 months it works quite well.
So here's my scores on the doors.
Zopa, 5.55%, about 75/25 split longer/shorter. This figure is greater than the underlying loans due to rate promise cashbacks and deposit cashbacks which for the purpose of calculating actual return are included. This is a 12mth figure.
Ratesetter, 5.49% all 5 year market, 12 months figure.
Thincats, 7.24%, no defaults yet. Lower than expected due to some interest at redemption loans and long drawdown times. Also 12 month figure
Wellesley, 1.37%, 18 month market, 3 month return.
Assetz, opened account in Feb was about to invest and the peeved me off by offering cashback to existing lenders that had already committed funds so I fell outside of this and decided to put my money elsewhere.
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Post by cautious on Aug 19, 2014 15:02:28 GMT
For me at end July;
Zopa = 5.15%
Ratesetter = 5.64% ......both 5Yr terms and 12mth return calculations
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c88dnf
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Post by c88dnf on Sept 5, 2014 12:05:07 GMT
On Ratesetter my current figure is 5.66%.
That's for the 5 months of the current tax year, with 97% of cash in 5-year and the rest in 3-year, all being reinvested in 5-year. Reinvestment is usually within 24 hours, never longer than 48. No additional deposits or withdrawals during the past 5 months, other than interest reinvested.
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pikestaff
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Post by pikestaff on Jun 16, 2015 8:55:06 GMT
Further update to my cumulative XIRRs on the platforms where I am active. The figures include accrued interest (estimated in the case of TC), and I've now added a provision for bad debts where I think it is appropriate:
AC (Joined July 2013)
10.03% before provision for bad debts
5.57% after provision for bad debts
I have allowed a 1% general provision, plus specific provisions in those cases where I expect a significant shortfall. Open forum so no details here, but the largest single provision is for the plumber. I'm a bit disappointed by my AC experience to date. I think I've relied too much on the stated security. I'm being more selective now.
TC (joined April 2013)
11.53% before provision for bad debts
9.53% after provision for bad debts
The XIRR on TC benefits significantly from cashbacks. I have allowed a 1.5% general provision, plus specific provisions in those cases where I expect a significant shortfall. So far I have been much better at avoiding problem loans on TC than on AC. Hoping it continues!
RS (joined April 2013)
5.54%
All in 5 year market. A lot of money in spring/summer 2013 went on at about 5%, which depresses the average.
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upland
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Post by upland on Jun 17, 2015 7:52:04 GMT
Further update to my cumulative XIRRs on the platforms where I am active. The figures include accrued interest (estimated in the case of TC), and I've now added a provision for bad debts where I think it is appropriate: AC (Joined July 2013) 10.03% before provision for bad debts 5.57% after provision for bad debts I have allowed a 1% general provision, plus specific provisions in those cases where I expect a significant shortfall. Open forum so no details here, but the largest single provision is for the plumber. I'm a bit disappointed by my AC experience to date. I think I've relied too much on the stated security. I'm being more selective now. TC (joined April 2013) 11.53% before provision for bad debts 9.53% after provision for bad debts The XIRR on TC benefits significantly from cashbacks. I have allowed a 1.5% general provision, plus specific provisions in those cases where I expect a significant shortfall. So far I have been much better at avoiding problem loans on TC than on AC. Hoping it continues! RS (joined April 2013) 5.54% All in 5 year market. A lot of money in spring/summer 2013 went on at about 5%, which depresses the average. I have just joined AC and was hoping for a better return than about 6% , do you think that your result due to a smaller portfolio size than say FC ?
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pikestaff
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Post by pikestaff on Jun 17, 2015 9:59:18 GMT
I have just joined AC and was hoping for a better return than about 6% , do you think that your result due to a smaller portfolio size than say FC ? Lack of diversification probably is an issue. I may have been unlucky in my portfolio and/or conservative in the level of bad debt provisions I have chosen to apply, but time will tell. My overall return from FC for the period that I was on it (Apr 13 - Feb 14) was rather less than 6%. It was not worth the effort for me, though my impression is that market conditions on FC may be more benign now.
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upland
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Post by upland on Jun 17, 2015 13:00:03 GMT
I have just joined AC and was hoping for a better return than about 6% , do you think that your result due to a smaller portfolio size than say FC ? Lack of diversification probably is an issue. I may have been unlucky in my portfolio and/or conservative in the level of bad debt provisions I have chosen to apply, but time will tell. My overall return from FC for the period that I was on it (Apr 13 - Feb 14) was rather less than 6%. It was not worth the effort for me, though my impression is that market conditions on FC may be more benign now. My initial impressions of AC were that it was interesting and quite different to FC but its just the numbers of loans that are so small. I have 300+ loans on FC but I doubt whether I am going to get that with AC. Its been interesting learning about the disaster scenarios awaiting and I am starting to appreciate how some loan structures may fail in some cases.
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pikestaff
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Post by pikestaff on Jun 17, 2015 15:55:05 GMT
My initial impressions of AC were that it was interesting and quite different to FC but its just the numbers of loans that are so small. I have 300+ loans on FC but I doubt whether I am going to get that with AC. Its been interesting learning about the disaster scenarios awaiting and I am starting to appreciate how some loan structures may fail in some cases. I think AC will achieve much higher recovery rates than FC on those loans that default. However, 10 of my 50 loans on AC (coincidentally also 20% by value) are currently suspended. This is too many. Of these I expect a significant loss on 2, a smaller loss on 4 more, and full recovery on 4.
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upland
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Post by upland on Jun 17, 2015 18:12:29 GMT
I think AC will achieve much higher recovery rates than FC on those loans that default. However, 10 of my 50 loans on AC (coincidentally also 20% by value) are currently suspended. This is too many. Of these I expect a significant loss on 2, a smaller loss on 4 more, and full recovery on 4. I agree , I am impressed and very interested to watch the way that a bad debt is being handled by AC. I imagine that FC must do something sort of similar but without the detail and encumberance of the loan charges. We do not see that really. I think that with 50 loans that one may (this is very hand waving) imagine that one deviation is about 7 looking at it as a probability exercise. 10 loans gone bad is not even two deviations. It sounds like the loans are not equal in value and you have been unlucky (I have done that in equities). I think that even with FC that the numbers are small and I notice that the losses and recoveries quoted by others are quite different to mine. I have lost about £112 and had £57 recovered which I make about 50%. FC are hoping to eventually get 40% eventually so I have been lucky. That is over a period of 3-4 years. I had not really appreciated how slow this recovery process actually is. I am not sure how my results will change as with FC I have bought into a lot of the secured property loans so my 'risk' profile must have changed.
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