2021 Q4: Go & Grow Portfolio Review

Bondora

Go & Grow is our investors’ favorite way to invest in their wealth. We have over 158,000 satisfied Go & Grow investors! And there’s a good reason why it’s so popular: people want to build their wealth, and they don’t want to waste valuable time figuring out complicated investment funds. Go & Grow is the perfect solution!

Go & Grow is easy to use, offers a great return, and makes investing easy and fun.
Go & Grow is easy to use, offers a great return, and makes investing easy and fun.

Because we believe investors should do their homework, we do our best to provide you with valuable information about what makes Go & Grow successful: its portfolio distribution. Every quarter, we dive into the freshest information, so let’s take a closer look at Go & Grow’s Q4 portfolio:

Credit ratings

Diversification is at the core of our business, and Go & Grow is no exception. Instead of investing everything in only one credit rating, we spread investments across all 8 ratings, from AA to HR. By investing in several different loan pieces across multiple ratings, Go & Grow helps you get the most out of your investment.

Go & Grow Portfolio Overview – December 2021
Go & Grow Portfolio Overview – December 2021

D-rated loans still make up most of the Go & Grow portfolio, even though it decreased slightly from 26.9% in Q3 to 26.6% in Q4. The distribution of the other categories had a few changes, compared to the monotony of previous quarters. C-rated loans surpassed E-rated loans, jumping 5.3%. This significant increase can be credited to the massive share of Finnish C-rated loans. More on that later.

E-rated loans are now in 3rd place, dropping 4.3%. B-rated loans are hot on their heels with 15%—up by 2.6%.

The outliers HR-, A- and AA-rated loans continue to have the smallest distribution across the Go & Grow portfolio, with HR still having the smallest share. In fact, the latter’s share halved from Q3 to Q4.

Country of origination

2021 was a good year for Bondora originations after the shocking events of 2020. Originations rebounded in 2021, with €16,678,471 originated in December alone.

The boost in Finnish loans was a direct cause of the massive increases we’ve seen. Finland increased its percentage share by 4%, making up 40% of the Go & Grow portfolio. On the other hand, Estonia lost 3% but still holds the majority share with 52%. Spain lost 1% and now makes up 8% of the Go & Grow portfolio. Spain still accounts for the smallest share of loans (9%), but as we gradually increase originations, we could see more Spanish loans in 2022.

Go & Grow portfolio distribution by country – December 2021
Go & Grow portfolio distribution by country – December 2021

Rating and country

Below you can see the total distribution of originations across Bondora (not only Go & Grow) in December 2021. If you compare all the figures in this article, you’ll see the distribution of Go & Grow claims is very similar to the entire Bondora portfolio.

In Finland, only 3 rating categories are being originated. Their C-rated loans take up the largest share in the entire portfolio, with a 35.8% share. In Spain, C-rated loans (the only category currently originated in this market) make up a 1.1% share. In Estonia, loans ranging from AA to HR ratings are being originated. The result is a far more equal spread of shares, with the B-rating category taking up 9.5%—the largest share from the Estonian market.

If you want to read more about our portfolio stats, please follow the regular updates on our blog.

Total Bondora origination by rating and country – December 2021 (€16,678,471 total originations).
Total Bondora origination by rating and country – December 2021 (€16,678,471 total originations).

Investment goals

We encourage our investors to choose a goal when they’re investing. Because when you set a goal, you’ll work harder to reach it. And who doesn’t love smashing their goals?

The chosen investment goal won’t affect your returns in any way, but it makes it easier to commit to your goal if it resonates with you. As with every quarter, Extra Income (57.9%) still has the clear majority. However, this must be taken with a grain of salt, seeing as it’s the default selection on Go & Grow.

In Q4, Retirement (12%) increased by 0.2% and Rainy Day (11.5%) with 0.1%. Both remain in 2nd and 3rd place, respectively. Big Purchase (9.8%) dropped by 0.1%, and Travel (5.1%) and Children (4.2%) both increased by 0.1%. The order of all goals remains unchanged.

Go & Grow investors' goals – December 2021
Go & Grow investors’ goals – December 2021

Go & Grow on the go

We’ve been hard at work to bring the new Go & Grow app to all our investors. On the app, you can create and update your unique goals, make instant payments, check your investment growth, withdraw your money at any time, and so much more.

It has all the core features of the web-based Go & Grow, but with the convenience of fitting into your pocket. And it’s super fun to use!

We release new features regularly, so make sure you download the app from the Google Play store or the Apple app store today.

Go & Grow – the easiest way to invest

At Bondora, we keep things simple and effective. And that’s what makes Go & Grow so great. There’s nothing complicated; it’s super easy to use, and it’s our simplest way to invest online.

5 reasons to choose Go & Grow:

🌱 Up to 6.75%* p.a. net return

🌱 Incredibly easy to use – great for beginners!

🌱 Start with as little as €1

🌱 Zero annual management fees

🌱 Create a goal and get updates on your progress

The Go & Grow payment limit increased to €1,000

As more and more people want to invest in Go & Grow, it’s crucial to ensure the quality of the portfolio powering it. So, to keep up with our growing investor community, we’re sustainably increasing our lending volume. That’s why we implemented our payment limit in 2020. But, after careful considerations backed by data, we’ve increased our net limit to €1,000 per investor per month.

This increase means more people have more opportunities to invest with Bondora. But, while keeping the limit in check, it helps us keep the platform growing sustainably. So, whether you’re new to Bondora or have invested with us for years—everyone will have an equal opportunity to invest their money.

You can read more about the Go & Grow payment limits on our support site.

Is the rate of up to 6.75%* p. a. guaranteed?

The rate is not guaranteed; however, the average net return on the Bondora platform is much higher than this. With this and our 13-year track record in mind, we believe the rate of up to 6.75%* p. a. is achievable.

The net return is capped at 6.75%* p. a. All excess returns over this percentage are reinvested to ensure you can earn the rate of 6.75%* p. a. going forward, despite no guarantee in place.

Let’s talk about risks

While it’s great to say we’ve delivered on our promises to investors so far, we want to ensure you’re aware of possible risks.

1. The net return falls below 6.75%* p. a.

Although returns are not guaranteed, a headline benefit of Go & Grow is the high-yielding return of up to 6.75%* p. a. Compared to the net return rates achieved since Bondora’s inception, the rate of 6.75%* p. a. provides a substantial buffer. As mentioned earlier in this article, the Go & Grow portfolio mirrors that of the overall composition of the loans originated at Bondora – in other words, across different risk ratings and countries. These loans were originated using our latest generation of credit analytics, a proprietary model developed for over a decade.

Therefore, the actual Internal Rate of Return (IRR) of the Go & Grow portfolio significantly outperforms the headline rate of 6.75%* p. a. – the returns generated over this amount are held back as reserves are reinvested to mitigate the risk further. Bondora has no claim on these reserves. Overall, this gives us statistical confidence that the rate of 6.75%* p. a. is deliverable for the foreseeable future. But please note: the yield achieved in past periods does not guarantee the return rate in future periods.

However, a risk that may affect our ability to deliver on the rate of 6.75%* p. a. is the number of investments we receive from investors. For example, suppose investors add more money to Go & Grow accounts than we can originate in loans. In that case, this results in a percentage of the portfolio remaining in cash (i.e., not earning a return). As an extreme measure, we could stop accepting new investors altogether and form a waiting list. However, our mission is to provide everyone with the opportunity to invest, which is why we could choose to implement an investment limit, as we’ve done with the current Go & Grow payment limit.

2. Liquidity

The plan for Go & Grow was always to have a product with fast liquidity for investors. To create it, we analyzed close to a decade of cash flow data on Bondora investor transactions to determine the inflows, outflows, and how the portfolio cash flows moved overall. This is so investors can rely on withdrawing money from their Go & Grow accounts at short notice.

In addition to this, we analyzed cash flow data from several banks and investment funds – specifically, their redemption and withdrawal cash flows, during the global financial crisis of 2007-08. This, combined with our data, has given us the necessary information to mitigate the liquidity risk as much as possible.

If Bondora cannot fulfill all withdrawals from Go & Grow, two scenarios will follow (and will be decided by whichever occurs first). We have simplified them into two sharp points below, however for a full description, please read section 7.6. of the Go & Grow Terms of Use.

  • The investor will receive their entire withdrawal once there’s enough money available in the Go & Grow portfolio, generated via further returns or investments.
  • The investor will receive partial withdrawal once there’s enough balance available – paid out each banking day until the entire withdrawal has been fulfilled.

If you want to know more about Go & Grow, click here.