How long to get invested in GBBA?

As just posted elsewhere on the forum and repeated here for completeness :


Hi everyone. We will be reverting on this PF point in more detail shortly.

In the meantime, it is important to understand that the PF is not an insurance policy, in the truest sense, as that would require a different set of permissions from the FCA. Payments from the PF are discretionary so as not to be implicitly an insurance policy. It is the intention to pay out on all losses, except where lenders have voted specifically to accept a loss – this is noted on the relevant web pages.

Each of Assetz Capital’s PF’s is intended to be funded to a level that should be more than sufficient to cover any actual capital losses on defaulted loans within the relevant account. The actual capital loss, once all avenues of recovery have been exhausted, should not be the full loan amount as it should be possible to recover some or all of our lenders’ capital through the security pledged in support of the loan.

Our PF’s are not designed to cover the whole loan capital on all defaulted loans as this would require considerable levels of capital in order to fulfil this. We estimate that roughly 6% of loans will default so for every £100m of lending we would need £6m of PF cash to be able to fulfil a requirement to purchase full loans immediately at the point of default. We do not – and could not – promise to do this. Instead, we know that not every default will result in a loss and we make considered calculations as to what the expected losses on defaulting loans will be and hold an acceptable level of cash to be able to cover expected losses at the end of the recovery process. Our PF web page says – and has always said – that the PF will cover “Any possible capital losses if a loan defaults and the security when sold does not cover the loan balance remaining” which defines both what the PF will cover and when it will cover it.

So to summarise, the PF would not be able to 'buy' whole loans from investors at the point of default but we do expect it to cover the final capital loss, if any, once it is known and the recovery process is finished. Our Defaults and Losses page shows the coverage ratio for each PF which is high for the industry but I accept that the page is due a refresh and this is underway.

It also shouldn't be forgotten that I understand that investors can submit losses in their tax return when they judge it is time to do so. It isn't purely down to our notification of final recovery. It can always be corrected afterwards. We are close to issuing our new tax statement which will help you make these decision.

I hope this assists.

In addition the algorithm is being improved substantially shortly so should also be faster.

Thanks for the clarification above on the auto invest accounts stuartassetzcapital

On a different but related matter can I just refer you to an email that I've received today, here's a graphic

gallery.mailchimp.com/5c696e5d92b499b2240be61c7/images/f0bc1581-1a9e-4a2c-822b-b4b94d9294bd.png

Perhaps I misunderstand or maybe there's a change to the way these accounts work but I don't think that we can "Opt Out" of certain loans as the piccy above seems to show, moreover this link below seems to say the same thing. I seem to remember a couple of years ago that it was going to work this way but then the "Opt-Out" thingy was removed for reasons that weren't gone into.

The link below from the FAQ again seems to say inerror that we can Opt-Out

www.assetzcapital.co.uk/faqs/?utm_source=Assetz+Capital+Members&utm_campaign=18b588bbc6-EMAIL_CAMPAIGN_2017_01_20&utm_medium=email&utm_term=0_f8d8dd0f0d-18b588bbc6-105600665

(for the link above first click on "Assetz Investment Accounts" then click on "Can I exclude certain loans from investment accounts?" for where it talks about Opt-Out appreciate these may well be talking about different things but are still confusing at best)

I also thought the GBBA/GEIA were supposed to diversify the holdings, so that no more than about 10% in any loan.

I looked at my GEIA the other day and 75% is in one loan!

There doesn't seem to be any way of changing this.

In my GBBA to largest holdings are in, you've guessed it, the suspended loans, making up over 80%.

I've managed to achieve a similar situation by reducing my stake in that fund dramatically. The result is I'm left with a duff loan which is now a larger proportion of my holdings than it used to be. Hopefully it will resolved successfully in the end.

We have asked for an explanation from the marketing team as I can see your point.