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Thread: Harmoney

  1. #2921
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    Platform RAR dips below 11%. Reflective of lax credit performance (quality control!) and v1.5...

  2. #2922
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    Still have issue with XIRR:

    Unfunded pp shouldn't be included, likewise WHT. RAR has a common methodology, aiding comparison between portfolios. Those putting up XIRR returns cannot be consider reliable unless methods can be verified.

    XIRR doesn't correctly handle part period, accrued income. eg below gives XIRR of 7.2% (should be 11%).... XIRR incorrectly assumes returns for loan1 generates zero cash for 8 days, loan2 nothing for 21 days


    1/1 30/1 15/2 28/2 8/3
    loan 1
    principal -1000 23.93 24.13
    int 10% 8.33 8.13
    princ out 951.93
    loan 2
    principal -1000
    int 10%
    princ out 1000
    cashflow -1000 32.26 -1000 32.26 1951.93
    Last edited by leesal; 16-01-2018 at 10:19 AM.

  3. #2923
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    Why do you think it should be 11%?

    What are you doing with the returned principle - reinvesting, holding, or withdrawing?

    You have 1000 invested for 66 days ($16.46 return) and 1000 invested for 21 days (no return). If you weight that out for an annual return for both it comes to around 7%? XIRR is probably not the best thing to use for such a small sample...

  4. #2924
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    Quote Originally Posted by leesal View Post
    Still have issue with XIRR:

    Unfunded pp shouldn't be included, likewise WHT. RAR has a common methodology, aiding comparison between portfolios. Those putting up XIRR returns cannot be consider reliable unless methods can be verified.

    XIRR doesn't correctly handle part period, accrued income. eg below gives XIRR of 7.2% (should be 11%).... XIRR incorrectly assumes returns for loan1 generates zero cash for 8 days, loan2 nothing for 21 days


    Its like you are living in the upside down world from stranger things.

    Xirr cannot be verified? I don't think you know what IRR or XIRR does and what it measures.

    Harmoney can tell you that you have a certain RAR, you can get all confused with money you have put into loans and then the dead period of the money being in there but not recieving an interest payment yet, all that stuff.

    Xirr on the other hand is the simplest most legit measure there is. Its simply the timing of cash in vs cash out. Nothing more nothing less. Thats as real as it will ever get despite what Harmoneys internal reporting might try and tell you.

    my RAR is 14.5%, my Xirr is 7%. I trust the Xirr.

    The only issue is how to handle the outstanding principle. I just treat it as an outgoing cash as at the last date.

    {edit} the example is an old one when I had a good XIRR, its now gone to ****e as I have had a lot of my E's defaulting. As I said my Xirr is now 7%, and the calc is too big to screen shot
    Last edited by alistar_mid; 16-01-2018 at 11:07 AM.

  5. #2925
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    Quote Originally Posted by alistar_mid View Post
    Its like you are living in the upside down world from stranger things.

    Xirr cannot be verified? I don't think you know what IRR or XIRR does and what it measures.

    Harmoney can tell you that you have a certain RAR, you can get all confused with money you have put into loans and then the dead period of the money being in there but not recieving an interest payment yet, all that stuff.

    Xirr on the other hand is the simplest most legit measure there is. Its simply the timing of cash in vs cash out. Nothing more nothing less. Thats as real as it will ever get despite what Harmoneys internal reporting might try and tell you.

    my RAR is 14.5%, my Xirr is 7%. I trust the Xirr.

    The only issue is how to handle the outstanding principle. I just treat it as an outgoing cash as at the last date.

    {edit} the example is an old one when I had a good XIRR, its now gone to ****e as I have had a lot of my E's defaulting. As I said my Xirr is now 7%, and the calc is too big to screen shot
    If your E's are defaulting, I'm completely screwed - 60% DEF in my portfolio.

    Thanks for that example. Unfortunately it confirms to me the knowledge on IRR (or excel XIRR) here is not good. No disrespect. Your figure of 7% is not reliable, and I am 100% certain of it.

    Rather then explain what you are doing wrong, it's easier to provide a tool to calculate your actual XIRR.

    Instructions

    1. Download your transaction statement(s). It should contain everything back to your very first deposit. Copy across your full "transaction history" into cells A to J in chronological order
    2. Drop the formula's in column K:O down (highlighted in green)
    3. In cell R1 - enter an estimate of your mid month outstanding principal - eg if you are downloading transactions to dec17 use the outstanding principal figure as at 15-Dec
    4. In cell R2 - enter your average interest rate (grossed up for PP interest if you like). A rough estimate would probably be fine here.
    5. Cell R3 - enter any additional provision you wish to make for the $ value of outstanding premiums in arrears that you believe will turn into charge-offs. If you don't know what to do here, just enter 0.

    Simple and your XIRR will be displayed in cell R4.

    What this will provide, is a XIRR that is tailored to Harmoney. ie strips out WHT, properly accounts for PP and correctly accrues period income.

    FYI, my XIRR as at 31-Dec is 12.3% (or 14.8% if provision for arrears to default is set to 0).
    Attached Files Attached Files

  6. #2926
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    Quote Originally Posted by alistar_mid View Post
    Its like you are living in the upside down world from stranger things.
    Love it

  7. #2927
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    Quote Originally Posted by leesal View Post
    Rather then explain what you are doing wrong, it's easier to provide a tool to calculate your actual XIRR.
    I don't look at Harmoney NAR, as it is very limiting as Alistair says. It may help compare poster portfolio performances withing Harmoney, but it is meaningless for comparisons across P2P platforms (more so, after Payment Protect).

    XiRR is a superior measure for cross platform comparisons, but in a growing portfolio the difference between XiRR and other methods like yours, can be remarkable (back of envelope calculations, although I haven't checked your method fully yet).

    You are also right in pointing out leesal, that XiRR does not account for accrued income, but then it is a tool made to measure performance based on actual historical cash movements. So, not an exact tool for what you are trying to achieve.

  8. #2928
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    Inclusion of payment protect inflates not just Harmoney NAR but also XiRR heaps, in growing portfolios. Beware

  9. #2929
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    Quote Originally Posted by leesal View Post
    If your E's are defaulting, I'm completely screwed - 60% DEF in my portfolio.

    Thanks for that example. Unfortunately it confirms to me the knowledge on IRR (or excel XIRR) here is not good. No disrespect. Your figure of 7% is not reliable, and I am 100% certain of it.

    Rather then explain what you are doing wrong, it's easier to provide a tool to calculate your actual XIRR.

    Instructions

    1. Download your transaction statement(s). It should contain everything back to your very first deposit. Copy across your full "transaction history" into cells A to J in chronological order
    2. Drop the formula's in column K:O down (highlighted in green)
    3. In cell R1 - enter an estimate of your mid month outstanding principal - eg if you are downloading transactions to dec17 use the outstanding principal figure as at 15-Dec
    4. In cell R2 - enter your average interest rate (grossed up for PP interest if you like). A rough estimate would probably be fine here.
    5. Cell R3 - enter any additional provision you wish to make for the $ value of outstanding premiums in arrears that you believe will turn into charge-offs. If you don't know what to do here, just enter 0.

    Simple and your XIRR will be displayed in cell R4.

    What this will provide, is a XIRR that is tailored to Harmoney. ie strips out WHT, properly accounts for PP and correctly accrues period income.

    FYI, my XIRR as at 31-Dec is 12.3% (or 14.8% if provision for arrears to default is set to 0).
    lmao, you are not as smart as you seem to think you are.

    Like I said in my earlier post, the only issue is how to handle the outstanding principle. That's the only difference.
    You have some weird way of valuing this, based on the average interest it will get, expected defaults / arrears etc.

    I have just treated is an outgoing payment on the last date. I even said that.

    I would question your knowledge on IRR / XIRR when you can't see the difference is simply down to how the outstanding principle is handled, instead you think its something do to with the calculation itself.

    Also you are only 4 months in (iirc), your loan portfolio is like a new born baby, you will have a low default rate and hence a high RAR / Xirr, wait til its 16 months in like some of ours and those defaults start hitting lol.

  10. #2930
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    Quote Originally Posted by beacon View Post
    I don't look at Harmoney NAR, as it is very limiting as Alistair says. It may help compare poster portfolio performances withing Harmoney, but it is meaningless for comparisons across P2P platforms (more so, after Payment Protect).

    XiRR is a superior measure for cross platform comparisons, but in a growing portfolio the difference between XiRR and other methods like yours, can be remarkable (back of envelope calculations, although I haven't checked your method fully yet).

    You are also right in pointing out leesal, that XiRR does not account for accrued income, but then it is a tool made to measure performance based on actual historical cash movements. So, not an exact tool for what you are trying to achieve.
    Hes essentially doing a basic Xirr calc like anyone could, but trying to forecast out the "true" value of his outstanding principle, which I have found from experience messing around trying to forecast what that might be based on harmoneys reported default stats / interest rates, just doesn't work out, cause suddenly your portfolio gets a year old and defaults blow up lol.

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