Max value for diversification
Is is possible to set a max value within the diversification settings, even if the sum is above 100%. I have set 15% for each and the sum is 578%. This makes no sense at first glance, but I want to have a max value for each LO. If I divide 100% by 66 LOs the amounts are simply too small.
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Daneel,
I would suggest that you breakdown the 66 different LO´s into managable groups of say 5-10 LO´s and distribute them according interest rates.
Eg:
Priority 1 - 14%+ - 5 to 10 LO´s each at 22-11% each - Total 110%
priority 2 - 13%+ - Again 5 to 10 LO´s each at 22-11% - Total 110%
This way you:
- Will always ensure your "top rate" loans are invested in first
- The 110% total size permits you to cover the abscence of loans from 1 of the LO´s if they havent issued any new loans
- You dont take low rate loans from an LO that would pay higher because youve set a rate for 66 LOs at the lowest rate possible 5 to 7%
I´m currently putting together a website entirely focusseed on different P2P strategies and how to deploy them. If it interests you (or anyone else) I´ll post a link when its done?
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Hey, thanks for the thorough answer. By grouping you mean creating separate strategies with 5-10 LO's each? I wouldn’t know how to prioritize otherwise.
Sure, I’d love to read about your P2P strategies when it’s done.
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Hi Daneel,
Yes! Different strategies = groupings.
Personally I go even further and have various individual strategies per LO.
Why?
Because of the loan length, the Interest rate, the geographical risk and the objective.
Let me give you an example:
All the same LO:
Strategy 1:
Primary market 16% - up to 48MTHS remaining, Country A, repayment method Full
Strategy 2:
Primary market14% - 10-14MTHs remaining, Country A, repayment method Full
Strategy 3:
Primary market13% - 0-6MTHs Country B
Strategy 4:
Secondary market: 15% YTM -1% Discount, Up to 36mths, BCountry A
Explanation:
Strategy 1 is an "opportunistic" strategy. I will take the loans when interest rates are high. Hold them for 3-6 repayments and when rates go low sell at +2%.
Strategies 2 and 3 are to be held for the full length of the loan.
Strategy 4 is to take advantage of any discounts on the secondary market and to bring in loans that are "established payers". (A loan is more likely to not be repayed at the begining of its life and therefore go to 60days late before repayment)
Note: I actually operate a number of other strategies per LO in addition to those listed. EG where an LO has different products - Short term, Long term, Interest Only, Different currencies....
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