nrw
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Post by nrw on Jun 2, 2017 12:19:29 GMT
Funding Circle's listed investment trust - ticker FCIF - looks like such a no brainer to me relative to buying loan parts directly:
- It can be purchased in an ISA or a SIPP.
- It yields 6.5% net of corporation tax, the equivalent of >8% before tax (higher than the average on the platform).
- It charges no more fees than the platform.
- It is debt leveraged, hence the enhanced returns.
- It is totally liquid, you can sell instantly (including distressed loans).
Negatives:
- The price can vary from NAV, though historically it's been pretty stable (it's currently a 3% premium).
- The buy/sell spread is greater than that on the platform (so it's not for the very short term).
- You can't choose your loans, but this is an alternative to Autobid (the majority) rather than manually bidding (the minority).
I sold my platform holdings and purchased FCIF.
I'd be interested in the views of others who are using Autobid as to why they invest on the platform rather than via FCIF?
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dandy
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Post by dandy on Jun 2, 2017 12:52:53 GMT
Funding Circle's listed investment trust - ticker FCIF - looks like such a no brainer to me relative to buying loan parts directly: - It can be purchased in an ISA or a SIPP. - It yields 6.5% net of corporation tax, the equivalent of >8% before tax (higher than the average on the platform). - It charges no more fees than the platform. - It is debt leveraged, hence the enhanced returns. - It is totally liquid, you can sell instantly (including distressed loans). Negatives: - The price can vary from NAV, though historically it's been pretty stable (it's currently a 3% premium). - The buy/sell spread is greater than that on the platform (so it's not for the very short term). - You can't choose your loans, but this is an alternative to Autobid (the majority) rather than manually bidding (the minority). I sold my platform holdings and purchased FCIF. I'd be interested in the views of others who are using Autobid as to why they invest on the platform rather than via FCIF? If you look at other such funds (GLI/P2PGI) I think they are trading at substantial discounts to NAV - although funds are invested directly in loans any decrease in confidence and/or liquidity could see you lose more on your share price then you make in dividends. Being leveraged just magnifies this possibility.
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blender
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Post by blender on Jun 2, 2017 12:57:53 GMT
So, in short, is the difference that it combines a market risk with the loan risk?
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nrw
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Post by nrw on Jun 2, 2017 13:13:02 GMT
In one way it includes a market risk - in that the share price can deviate from NAV (though in reality is pretty stable) - though in another way it reduces market risk as there is instant liquidity (it's a closed ended fund).
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Post by mikeyp on Jun 2, 2017 13:25:40 GMT
I hold some FCIF in my SIPP and ISA but also dabble direct with FC. One concern with FCIF is whether the quality of its loans will allow it to maintain the dividend level. A lot of the loans listed on the primary part market these days look dire. Another question is what will happen if interest rates return to more normal levels. With FCIF holding loans to maturity there could be more attractive returns elsewhere resulting in a fall in the capital value until the old loans unwind.
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Post by davee39 on Jun 2, 2017 14:39:00 GMT
Over the last couple of years P2PGI & VPC Speciality Lending have gone from a 10% premium to a discount approaching 25%, though both have since recovered. The latter has blamed its FC UK, Europe & US holdings for its failure to meet yield targets and a loss in asset value, these holdings have recently been dumped. I can see no good reason to hold either loan parts in FC or the IT, especially at a premium.
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nrw
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Post by nrw on Jun 2, 2017 14:56:21 GMT
Over the last couple of years P2PGI & VPC Speciality Lending have gone from a 10% premium to a discount approaching 25%, though both have since recovered. The latter has blamed its FC UK, Europe & US holdings for its failure to meet yield targets and a loss in asset value, these holdings have recently been dumped. I can see no good reason to hold either loan parts in FC or the IT, especially at a premium. Thanks Dave - my post was not intended to question FC's loan book, it was based on the assumption that one is comfortable with the loan book and is therefore going to invest in FC. Given that, the choice lies between the platform and FCIF...
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mary
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Post by mary on Jun 2, 2017 15:18:28 GMT
I think it's a reasonable strategy (for the long term) to buy and hold these funds as it removes the need to manually do DD so it's easy provided they keep the dividends going. As interest rates rise they should be be able to increase dividends as P2P rates rise in sync.
I hold P2P, VSL and RDL.
RDL is on a near 12% yield at present (do your research as there is a reason), and I bought all these at a discount to NAV to hold for the long term and have only avoided FCIF due to the premium, if they go to a discount then I'll add some then.
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SteveT
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Post by SteveT on Jun 3, 2017 7:25:41 GMT
Having bought into P2PGI 6 months ago at 745p, when the discount spiked to around 25%, I'm feeling pretty positive about it today at 904p (still 10% discount to NAV)  The premium on FCIF has been stable for the last 9 months or so at around 2-4% and, in terms of yield, it "does what it says on the tin". I bought in at 3% discount in Q1 2016 and am happy to regard it as a long-term ISA holding. I may take profits on P2PGI at some stage but happy to hold on for now. |
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Post by gadget on Jun 3, 2017 10:42:27 GMT
I'd be interested in the views of others who are using Autobid as to why they invest on the platform rather than via FCIF? I don't use auotbid but if still think it is better than FCIF because autobid still gives you choice, not in individual loans but yield and risk appetite. I have no interest in an "A+" 6% gross business loan. If i was using autobid i would focus on the higher yield C, D and E loans and hope for a net return much higher than the 6.5% of FCIF.
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Post by GSV3MIaC on Jun 3, 2017 13:42:18 GMT
FCIF probably gets a bigger share of D/E loans than autobodge can ever hope to, because the IT get allocated random whole loans, whereas the bots get all the tasty D/E stuff long before autobodge ever wakes up. But yeah, FCIF also gets stuck with those delightful 6.x% A+s.
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Post by mrclondon on Jun 3, 2017 21:51:40 GMT
The main negative of FCIF in my view is the not insignificant exposure to US SME's. The FCIF publishes sector and geographical split of the SME's for both UK and US separately, and we have access to the historic perfomance stats of the UK loans. Without historic US loan data, and a better understanding of the dynamics of US SME's, the risks can not be quantified.
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