2022 Q2: Go & Grow Portfolio Review

Bondora

If you’re interested in how Go & Grow works, this article is perfect for you. We do our best to share valuable information about what makes Go & Grow successful: its portfolio distribution. Below, we go into detail about how the claims added to Go & Grow are distributed, the most common ratings, the most popular goal chosen by investors, and more. So, let’s take a closer look at Go & Grow’s 2022 Q2 portfolio:

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

Go & Grow is our investors’ favorite way to invest. We have over 144,000 satisfied Go & Grow investors! And there’s a good reason why it’s so popular: people want to build their wealth and don’t want to waste valuable time figuring out complicated investment funds. Go & Grow is our simplest solution! And, with the new Go & Grow App and the Unlimited tier of Go & Grow, we’re making it even better.

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 – June 2022
Go & Grow Credit Rating Portfolio Overview – June 2022

B and C-rated loans were the only ones to increase this quarter from Q1 2022. The latter had the largest increase, growing from 24.6% at the end of Q1 to 29.1% this quarter. It still makes up the most significant part of the portfolio, which is mirrored in the overall Bondora portfolio (as shown below in the Total Bondora origination by rating and country chart).

D-rated loans declined slightly from 23.5% to 22.3%. It is the 2nd largest category in the Go & Grow portfolio.

E-rated loans remain in 3rd place, with 14.5%, but only just, as B-rated loans increased their position and are now only 0.5% behind in 4th. F-rated loans follow in  5th place, declining from 13.5% to 12.3%

Once again, the outliers HR-, A- and AA-rated loans have the lowest distribution figures, with HR still having the smallest share. It dropped from 1.1% to 0.96%. AA and A-rated loans decreased by 0.5% and 0.2%, respectively.

Country of origination

June was a slower month, as usually is the case in summer, but overall, the average loan origination figure increased from €14.3M in Q1 to €14.7M in Q2.

Finland continues steadily on the path of growth, increasing with 2% to a 44% Go & Grow portfolio percentage share. On the other hand, Estonia lost 2% and now has a 49% share. If this path continues, Finland could soon make up the largest portion of the Go & Grow portfolio distribution.

Spain maintains a steady share of loans at 7%. It has shown constant and consistent growth since September 2021’s relaunch, and we expect this trend to continue.

Go & Grow portfolio distribution by country – June 2022
Go & Grow portfolio distribution by country – June 2022

Rating and country

Below you can see the total distribution of originations across Bondora (not only Go & Grow) in June 2022 (the end of Q2).

Across all three markets, C-rated loans still make up the largest share of loan ratings. Finland’s C-rated loan category still makes up the majority in the country and across all our loans but fell with nearly 10% to a smaller share of 42.4%.

Estonia’s C-rated loan category is the 2nd largest across all our loans, with a 17.4% rating. But the B-rated loan category has increased from 9.5% at the end of Q1 to 13.5% at the end of Q2. F and HR-rated loans have not been originated in Q2.

Lastly, in Spain, we are still only originating C-rated loans. Although Spanish loans have increased steadily since relaunching in September 2021, June 2022 was the first month since then to have shown a decline in originations. At the end of Q1, it had a 3.4% share, but now it is a 2.8% share.

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 – June 2022 (€12,913,190 total originations).
Total Bondora origination by rating and country – June 2022 (€12,913,190 total originations).

Investment goals

With Go & Grow, you can customize the goal that you are saving towards. We encourage all our investors to choose an investment goal because, with a goal, you are more likely to prioritize that investment and reach financial success. The goal you choose doesn’t affect your returns, but it’s simply to help you personalize your Go & Grow account.

As with every quarter, Extra Income (56.2%) still has the clear majority, despite a 0.6% decline. But, because it is the default selection on Go & Grow, it has to be taken with a grain of salt.

Retirement (12.3%) increased by 0.1% and is now the 2nd most popular goal, swapping places with Rainy Day (12.0%), which increased by 0.3%. Big Purchase (9.8%) increased by 0.1%, Travel (5.3%) remained the same, and Children (4.3%) increased by 0.1%.

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

Go & Grow – our 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 our simplest way to help you 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 €400 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.

But, we also want to give our investors what they want while growing responsibly. This is why we launched Unlimited, a tier of Go & Grow that allows you to invest any amount with no limits. Read more below:

Investing without limits

Unlimited is a new tier of Go & Grow where you can invest with no monthly or overall limits and earn a competitive net return of up to 4% p.a.* Your Go & Grow classic tier will continue earning up to 6.75% p.a. independently.

Once activated, you can add money into your Unlimited tier directly from your bank account using your unique Go & Grow Unlimited reference text. You can also enable Auto-transfer to automatically transfer all the money in Wallet into your Go & Grow Unlimited tier or your chosen classic Go & Grow tier. Read how to do that in this support article.

Go & Grow on the go

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

The app allows you to create and update your unique goals, make instant payments, check your investment growth, withdraw your money anytime, 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. It also makes transferring money from Wallet into your chosen Go & Grow or Go & Grow Unlimited even easier. Over 84,000 people have already downloaded it. So, try it today!

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

Is the Go & Grow 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, please read section 7.6. of the Go & Grow Terms of Use for a full description.

  • 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.