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Post by elephantrosie on Aug 26, 2017 11:09:37 GMT
I found a loan that I believe is worth investing, but I have been put back by its only 7% ROI and yet without provision fund. looking at the other investment categories, they all have provision fund and yet they include the same funds under the manual ones.
i wonder if other investors have the same thoughts?
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Post by beeje13 on Aug 26, 2017 11:23:23 GMT
These should be the lower risk (lower ltv, higher quality borrowers) loans that go mostly to the 5.5% targeting Property-secured account.
But that doesn't exclude them from the GBBA - I am sure I have parts from the same loan in separate accounts...
I Agree it would be a bit odd to buy these lower return loans in the manual account because lack of PF protection. I can see that being closed in time, like on FC.
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rick24
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Post by rick24 on Aug 26, 2017 13:32:27 GMT
I believe the GBBA will allocate up to 20% of your cash to a single loan, whereas the MLIA allows you to invest a smaller fraction of your funds, thus increasing diversification. This is a benefit that would weigh with me, even on the 7% loans, although I would be slightly reluctant to go for them. Nevertheless, provided I can keep my average interest rate above that, then I would be prepared to accept a number of loans at 7%.
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Post by elephantrosie on Aug 26, 2017 13:45:19 GMT
thanks both for the replies.
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Post by df on Aug 26, 2017 14:09:53 GMT
I found a loan that I believe is worth investing, but I have been put back by its only 7% ROI and yet without provision fund. looking at the other investment categories, they all have provision fund and yet they include the same funds under the manual ones.
i wonder if other investors have the same thoughts? Yes, I had similar thoughts. PF is a piece of mind, but auto-accounts don't allow for an even spread across the loans. My strategy is not to invest in under 8% loans in MLIA.
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Post by elephantrosie on Aug 26, 2017 18:02:56 GMT
am i right that historically no one had lost money in the loan categories covered by PF?
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jlend
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Post by jlend on Aug 26, 2017 18:08:25 GMT
am i right that historically no one had lost money in the loan categories covered by PF? My understanding is 1. No one has ever lost money 2. The provision fund has yet to pay out on a loan
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Post by df on Aug 26, 2017 19:43:35 GMT
am i right that historically no one had lost money in the loan categories covered by PF? Yes, as far as I know this is the case, but past performance is not a guarantee for the future, so I wouldn't rely 100% on discretionary PF.
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Esmeralda
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Post by Esmeralda on Aug 27, 2017 17:51:21 GMT
If you ever vote on a loan, bear this PF clause in mind:
"In a situation where Lenders vote to accept a proposal from a borrower for debt forgiveness when there is a clear alternative that offers the prospect of full recovery of Lenders' funds, the Provision Fund will not normally cover losses for those individual Lenders who voted to accept that loss. Lenders that did not vote or that individually voted against taking a loss should expect to be covered by the Provision Fund irrespective of a majority decision to take a loss."
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Post by crabbyoldgit on Aug 27, 2017 18:54:22 GMT
like this , i love it, what in effect says is no invester can vote on a difficult loan situation feeling that as the the provision fund may protect them, a fast easy out at the cost of mlia investors will not wash. Do not get me wrong the new improved visibility of loan parts owned by black box accounts which will increase numbers actively participating lenders in votes i support.What does it say on the box, fairer together, or some such.
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Post by Ton ⓉⓞⓃ on Aug 27, 2017 22:42:50 GMT
If you ever vote on a loan, bear this PF clause in mind: "In a situation where Lenders vote to accept a proposal from a borrower for debt forgiveness when there is a clear alternative that offers the prospect of full recovery of Lenders' funds, the Provision Fund will not normally cover losses for those individual Lenders who voted to accept that loss. Lenders that did not vote or that individually voted against taking a loss should expect to be covered by the Provision Fund irrespective of a majority decision to take a loss." This clause makes me think it would be nice to have a voting right for my black box accounts and one for my MLIA. In that way I can vote both A & B.
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Post by Ton ⓉⓞⓃ on Aug 27, 2017 23:03:00 GMT
I found a loan that I believe is worth investing, but I have been put back by its only 7% ROI and yet without provision fund. looking at the other investment categories, they all have provision fund and yet they include the same funds under the manual ones.
i wonder if other investors have the same thoughts? One loan can appear in several different accounts, it's inclusion in those accounts depends on the account criteria. MLIA is where you can select your own loans and has no PF; so it's wise to "make your own PF" or think how you will deal with losses when they come. You can read up about the rules for each of the accounts (QAA, GBBA etc) on the AC site. I think I'm right in saying that a 7% loan will not be included in accounts that pays 7%, but it might be in the account that pays 5.5% and therefore have coverage in that account PF. I think all loans are allowed into the QAA and the 30DAA.
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Post by jevans4949 on Aug 28, 2017 9:51:47 GMT
If you ever vote on a loan, bear this PF clause in mind: "In a situation where Lenders vote to accept a proposal from a borrower for debt forgiveness when there is a clear alternative that offers the prospect of full recovery of Lenders' funds, the Provision Fund will not normally cover losses for those individual Lenders who voted to accept that loss. Lenders that did not vote or that individually voted against taking a loss should expect to be covered by the Provision Fund irrespective of a majority decision to take a loss." ... which leads one to ask: if full recovery was a prospect, why would Assetz ask users to vote on a debt forgiveness proposal? Also, how do Provision Fund trustees decide whether full recovery is/was a realistic prospect?
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am
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Post by am on Aug 28, 2017 14:02:30 GMT
As I understand, one hazard of the packaged accounts is that your money can get tied up in them for a long time as the recovery process proceeds. (I'm a little disturbed that 15% of my GBBA holding, and my largest AC holding altogether, is in a loan that I deliberately avoided on the MLIA, and is approaching the end of its term. Regardless of whether I'm covered by the provision fund I could end up with that money getting tied up. I'd be happier if the diversification algorithm on the GBBA drove a more equal diversification - rather than 15% in one loan, and 10% in half a dozen others, and 0.1% or less is a variety of more recent loans.)
If someone thinks that a particular 7% loan is a particularly good risk, they might prefer to take the capital risk on the loan in the MLIA, rather than the liquidity risk of a basket of other loans in the GBBA.
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jlend
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Post by jlend on Aug 28, 2017 17:15:39 GMT
If you ever vote on a loan, bear this PF clause in mind: "In a situation where Lenders vote to accept a proposal from a borrower for debt forgiveness when there is a clear alternative that offers the prospect of full recovery of Lenders' funds, the Provision Fund will not normally cover losses for those individual Lenders who voted to accept that loss. Lenders that did not vote or that individually voted against taking a loss should expect to be covered by the Provision Fund irrespective of a majority decision to take a loss." ... which leads one to ask: if full recovery was a prospect, why would Assetz ask users to vote on a debt forgiveness proposal? Also, how do Provision Fund trustees decide whether full recovery is/was a realistic prospect? would it be possible to make it clear in every vote request if this scenario occurs so lenders don't inadvertently fall foul of this clause?
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