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Thread: Harmoney

  1. #4141
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    Default Not time of the year myles. Just times of our lives...

    Quote Originally Posted by Cool Bear View Post
    It is very much reduced.

    The number of loans I invested in for one of my pooled fund:
    Jan2018 520 loans vs Jan2019 79 loans
    Feb2018 408 loans vs Feb2019 54 loans
    My numbers are smaller than yours Cool Bear, but I have also only done roughly 10% of the volume this Feb as compared to Feb last year. My January volume was also roughly 20% of my Jan numbers last year.
    So, definitely a big shift in loan volume away from retail lenders to institutional lenders recently, regardless of whether the loan volume lifted or fell overall due to seasonality.

    Securitization is definitely an innovation whose time seems to have come in New Zealand. Although I read today that "In Australia, a $120 mln residential mortgage bond made up of Suncorp mortgages suffered defaults to a trigger level where investors may not get all their money back. It is being described as a 'canary' moment." And Harmoney loans aren't even secured, but kudos for this are due to Harmoney nevertheless.

  2. #4142
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    Dont know if anybody has noticed most loans hit the market 65% filled - which is most likely the intuitional investors getting their slice first. And the remainder go to us plebs. Not sure if the 65% is includes auto loaned as well.

    Given the market, i here lots of radio airtime for gem and moola – (especially on the Polynesian radio stations - perhaps they are nibbling all the loan or perhaps just not enough stock maybe the loans interest rates are not correct market wise.

  3. #4143
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    As I understand it loans that go to the instututional pool we never see, so the 65% is probably the autolend.

  4. #4144
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    From my perspective the quality of the loans has also gone down since Xmas - so Harmoney telling porkies on volume and quality

  5. #4145
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    A cynic would suggest that Harmoney has decided that the only way to make a buck given what is a fairly static portfolio total is to make a margin on loans subscribed for by Harmoney itself. Essentially that is what the announcement indicates, in which case retail is likely to continue to see what both kiwi on oe and I have seen the past few months - poor quantity and quality; and why wouldn't the platform cherry pick the loans?

  6. #4146
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    Quote Originally Posted by BJ1 View Post
    and why wouldn't the platform cherry pick the loans?
    Because it would likely lead to a huge fine and/or some time in jail... I personally don't believe this is happening.

  7. #4147
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    One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
    https://www.harmoney.co.nz/lender-bl...y-unique-loans

    It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.

  8. #4148
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    Quote Originally Posted by nickw View Post
    One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
    https://www.harmoney.co.nz/lender-bl...y-unique-loans

    It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.
    Pity they don't provide specific usable advice, for example how many loans of a particular grade is enough to give the expected return to a specified probability. The generic "don't recommend more than 4 units in one loan" is absurd because it takes no account of portfolio size.

    I'm thinking a better way to maintain, or even grow, investment might be to reduce diversification rather than drop filters. I have 1000's of loans, maybe that could be 100's with a negligible increase in volatility of returns? Anyone know how to crunch the stats or got some rules of thumb?

  9. #4149
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    Default Welcome to the chat forum nickw!

    Quote Originally Posted by nickw View Post
    One of the main points about investing in P2P is the diversification of the funds and the importance of having a small amount of investment in many loans. This is a key point that Harmoney make to all investors. Only last month (February), the Lender blog was discussing imaginary portfolios by Jack and Sarah, and the importance of spreading the risk over a large number of loans.
    https://www.harmoney.co.nz/lender-bl...y-unique-loans

    It seems ironic that Harmoney should continue to impress the importance of diversification whilst at the same time reducing the number of loans available to invest in. As of the time of writing there were only 5 loans in the last 24 hours.
    Loan numbers have been dismally low for most of the moons since before Christmas now. That's three months, compared to the last time they did this for a month or so - in June last year.

  10. #4150
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    Quote Originally Posted by RMJH View Post
    I'm thinking a better way to maintain, or even grow, investment might be to reduce diversification rather than drop filters. I have 1000's of loans, maybe that could be 100's with a negligible increase in volatility of returns? Anyone know how to crunch the stats or got some rules of thumb?
    First read this Lender Risks and this Diversification, both contain some good info.

    I posted my thoughts on this a ways back - it went something like this: (note this is based on my loan selection of typically C and D grade loans)

    For a $10,000 investment, diversify at $25 per loan - this is the minimum for Harmoney (an investment smaller than this has a potentially higher risk due to lack of diversification). This works out at 400 loans (on a fixed set of loans 10000/25). If one loan defaults, that works out at a loss of (25/10000)*100 = 0.25% of initial investment (based on loan defaulting from day one). The overall average default rate varies depending on loan selection.

    My thinking is that the above ratio of loss is more than acceptable (industry suggested diversification rate is 1% - 100 loans).

    So my thinking is that a minimum of 400 'whole' loans (or more), no matter the investment size, will give 'enough' diversification. So for an investment of $50,000, a loan size of 50000/400 = $125 per loan will give the same level of diversification.

    In actual fact the diversification is much better than this since, as loans age, they become smaller (partially paid off), so although, in the previous $50,000 example, 400 loans are invested at $125 each, over time, this will result in many, many more loans than the initial 400 as older loans shrink over time.

    So my suggested diversification volume is 400 'whole' loans (or more) for whatever total value you invest.

    Added: I currently invest in 8 - 10 notes per loan ($200 - $250) based on over $100K invested. I believe this is probably still significantly more diversification than required, but I'm happy with that level. (I currently have around 1000 loans).
    Last edited by myles; 07-03-2019 at 08:15 AM. Reason: added:

  11. #4151
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    Thanks Myles. It has been a while since I thought about this but I think the rules of thumb be it 100 or 200 etc are focused on not making a loss rather than providing confidence intervals around expected returns. Seems like about 1000 loans are required to practically remove random volatility of returns. And that's per grade not total portfolio. An impossible task given current listing numbers. I've posted this article before but it's still thought provoking https://www.lendingmemo.com/risk-div...n-p2p-lending/

  12. #4152
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    Harmoney to raise 25 Mill this year...

    https://www.interest.co.nz/banking/9...says-peer-peer

  13. #4153
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    Quote Originally Posted by Saamee View Post
    Harmoney to raise 25 Mill this year...

    https://www.interest.co.nz/banking/9...says-peer-peer
    Pity we can't participate!

    I think it used to be a good deal more than 57% of applications rejected but maybe that reflects better algorithms?

  14. #4154
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    Anz has recently started reporting more information to credit reporting agencies. This can have a substantial affect on credit scores and will help improve their accuracy. Harmony relies heavily on prospective borrowers credit rating for loan grading purposes. So you would expect, given ANZs market share, that loan grading will now be more accurate from Harmoney.

  15. #4155
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    Quote Originally Posted by RMJH View Post
    Pity they don't provide specific usable advice
    They probably can't because that would likely be considered financial advice and there are various rules around who can offer financial advice.

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