2022 Q1: Go & Grow Portfolio Review

Bondora

Go & Grow is our investors’ favorite way to invest. We have over 139,000 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 our simplest solution!

Investing is easy with Go & Grow. Start today!
Investing is easy with Go & Grow. Start today!

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 2022 Q1 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 Credit Rating Portfolio Overview – March 2022
Go & Grow Credit Rating Portfolio Overview – March 2022

This quarter, D-rated loans dropped from 26.6% to 23.5%. It is now the 2nd largest category in the Go & Grow portfolio. C-rated loans now make up the most significant part of the portfolio, with 24.6%. This is mirrored in the overall Bondora portfolio (as you can see below). This is, once again, attributed to the growth of Finnish C-rated loans.

E-rated loans remain in 3rd place, gaining 0.5%. B-rated loans remain in a close 4th position with 13.9%—dropping 1.1%.

The outliers HR-, A- and AA-rated loans still have the lowest distribution across the Go & Grow portfolio, with HR still having the smallest share. But, after dropping significantly last quarter, it has now started to grow again by 0.4%.

Country of origination

This year has been building on the positive tone of 2021 Q4. Compared to Q1 last year, 2022 is looking very promising, with just over €14M consistently originating each month of 2022 Q1.

The growth in Finland continues, albeit at a slower pace. Finnish loans increased their Go & Grow portfolio percentage share from 40% to 42%.

On the other hand, Estonia and Spain lost 1%, but Estonia still has the majority share. Spain might have the smallest share of loans (7%), but this market grows constantly and steadily. Compared to the end of Q4, Spanish loans have increased by 164.2% to the end of 2022 Q1.

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 March 2022 (the end of Q1).

In Spain, C-rated loans (the only category currently originating in this market) make up a 3.4% share—climbing slowly from last quarter’s 1.1% share. Estonia has the 2nd largest one—a 13.7% share. In Estonia, loans range from AA to HR ratings, and C-rated loans make up the largest share, switching places from last quarter’s B-rated loan dominance.

In Finland, C-rated loans also take up the most significant portion. It took up a whopping 53.2% of the entire portfolio in March. Only 3 rating categories are being originated in Finland.

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 – March 2022 (€14,643,367 total originations).
Total Bondora origination by rating and country – March 2022 (€14,643,367 total originations).

Investment goals

We encourage our investors to choose a goal when they’re investing. Because when you have an investment goal, you are more likely to prioritize that investment and reach financial success. It doesn’t matter what investment goal you choose, as it won’t affect your returns, but it’s for you to personalize your Go & Grow experience.

As with every quarter, Extra Income (56.8%) still has the clear majority, despite a slight decline. But, this must be taken with a grain of salt, seeing as it’s the default selection on Go & Grow.
Retirement (12.2%) and Rainy Day (11.7%) increased with 0.2% each. Both remain in 2nd and 3rd place, respectively. Big Purchase (9.7%) remained unchanged, Travel (5.3%) increased by 0.2%, and Children (4.2%) remained the same. The order of all goals remains unchanged.

Go & Grow investors' goals – March 2022
Go & Grow investors’ goals – March 2022

Go & Grow on the go

If you haven’t downloaded the new Go & Grow app, you’re missing out!

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

We like to keep things simple and effective. And we believe that’s what makes Go & Grow so great. There’s nothing complicated; it’s super easy to use and the simplest way to grow your money 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 progress updates

What’s the Go & Grow payment limit, and why is there one?

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. We’ve implemented a net limit of €1,000 per investor per month through careful calculations since late 2020.

This means that we can keep the platform open for everyone to grow their money; while focusing on sustainable growth for the future. So, whether you’re new to Bondora or have invested with us for years—with this change, everyone will have an equal opportunity to grow their money.

Every decision we make at Bondora is data-driven. Our goal is to grow at a sustainable pace to protect investors’ best interests. That’s why we’re being cautious about expanding our portfolio.

You can now add unlimited investments with Go & Grow Unlimited! Read more here.

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 14-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 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 that 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, so we can 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. 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.

We also examined 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.