Go & Grow portfolio 2021 Q1: An in-depth look

Bondora

For nearly three years, Go & Grow remains Bondora’s most popular product. Launched in June 2018, it has over 126,000 happy investors. People want a simple service that’s inexpensive and easy to use to grow their money. And that’s what they get with Go & Grow.

Go & Grow portfolio 2021 Q1: An in-depth look.
Go & Grow portfolio 2021 Q1: An in-depth look.

Every quarter, we give investors a more detailed look into what makes Go & Grow successful: its portfolio distribution. Check out 2021’s first detailed deep-dive into Go & Grow’s portfolio, updated as of March 2021:

Credit ratings

You’ve heard us say it before, and we’ll say it again: Diversify, diversify, diversify! We always aim to give you the best of everything, which is why instead of investing everything into one credit rating, Go & Grow spreads the claims across different risk ratings—from AA to HR. The lowest distribution is in HR ratings, followed by A and AA.

Figure 2a - Go & Grow Portfolio Overview – March 2021
Figure 2a – Go & Grow Portfolio Overview – March 2021

The largest distribution remains in E- and F-rated loans, 23.8%, and 22.2%, respectively. They’re followed by D- (18.9%) and C-rated loans (15.1%). Diversification is key: Go & Grow consists of over 109,000 loan pieces. Our investors benefit from this diversification that traditionally could only be achieved with services such as Portfolio Manager, Portfolio Pro, or the API.

Since November 2020, we’ve restarted issuing loans in Finland, but this has not significantly affected loan rating distribution. However, it’s worth mentioning that the slight increase in D-rated loans (+0.9% from last quarter’s review) could be attributed to Finnish loans’ exponential growth, which all currently fall into the D-rated category.

Country of origination

Due to the pause on Spanish and Finnish loan originations, Estonia now accounts for an even larger majority share with 53%. Finland’s share has declined to 35%, and Spain’s share has a 12% total—a 3% drop from the last quarter. This isn’t surprising, as there are still no new loans being originated in Spain in an effort to protect the integrity of our originations in these unprecedented times. We expect Finland’s share to continue to grow and perhaps reach a percentage that resembles pre-pandemic numbers.

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

Rating and country

Rating and country Figure 4a below shows the total distribution of originations across Bondora (not only Go & Grow) in March 2021. If you compare all the figures in this article, you’ll see the distribution of Go & Grow claims approximately mirrors the entire Bondora portfolio. You can read more about the portfolio in our regular updates on our blog.

Total Bondora origination by rating and country – March 2021 (€7,723,492 total originations).
Total Bondora origination by rating and country – March 2021 (€7,723,492 total originations).

Investment goals

The chosen investment goals won’t affect your returns, but it’s interesting to see what people are saving for. The clear majority is Extra income (60%), but, as mentioned previously, this is likely to be skewed as it’s the default option.

This quarter, Retirement (11.4%) and Rainy Day (11.5%) swapped places, with the latter having the biggest share. The effects of 2020 have people thinking more about setting up emergency funds and preparing for a rainy day. After that, Big Purchase (9.4%), Travel (4.8), and Children (4.0%) follow. Due to global travel restrictions, lockdown measures, and the world’s overall uncertainty, it’s no surprise that Travel is one of the least-selected goals.

Investors' goals – March 2021
Investors’ goals – March 2021

Go & Grow is built on diversification, but that’s only one of the reasons why investors love it. Here are 5 other benefits of investing through Go & Grow.

Top 5 reasons to invest with 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

Let’s talk more about these benefits:

You get returns every. Single. Day.

If you invest with Go & Grow, then head to the ‘Statements’ tab on the left menu panel from your dashboard, and you will be able to track your returns easily. The returns are added to your account every day.

You can plan your financial future

If you click on the sandwich icon on the top-right corner of your Go & Grow account, you will find our “Forecast” tool. Use it to simulate investment scenarios and find the ideal plan to reach your long-term financial goal.

You can use the Forecast tool to create your very own investment plan to reach your goals.

Ideal for friends and family

With Go & Grow, investing is simpler than it’s ever been. Now nobody is excluded from taking control of their financial future. That means you can recommend Go & Grow to your uncle, who still keeps his money under the mattress, or to that friend who is good at saving money but too scared to invest it anywhere.

OK, what’s the catch?

There’s none. Really. We charge a flat €1 withdrawal fee, no matter the size of the account, and that’s all. This helps us continue to operate the Bondora platform so you can invest efficiently.

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. That’s why, through careful calculations, we’ve implemented a net limit of €400 per investor per month.

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 if you’ve 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 isn’t to expand exponentially but to grow sustainably and protect investors’ best interest. That’s why we’re being cautious about expanding our portfolio until we have more data about how the world economy will be in the coming months.

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 need to make sure you’re aware of the 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. Today, 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 and 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 more money is added to Go & Grow accounts by investors 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.

  1. The investor will receive their entire withdrawal once there’s enough money available in the Go & Grow portfolio, generated via further returns or investments.
  2. 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.