Portfolio Manager Guide
Welcome to the Portfolio Manager Guide. Here, you will learn everything you need to know about Portfolio Manager and get all the essential information. After, you can make the most out of its features for your investments.
We’ll explain step by step what you can use it for, what options are available, how to use them, how Portfolio Manager differs from our other investment services, and provide you with many more practical tips. Take the time to understand its functionality fully, it's worth it!
What is Portfolio Manager?
Portfolio Manager is a semi-automated service you can use to invest in peer-to-peer loans with Bondora. You don’t need any financial knowledge or other previous experience since it does everything for you. It's a service which manages everything to do with your investments, which makes it perfect for people who are new to investing in P2P, who are unsure of how to get started, who want to spend as little time as possible managing it and who want to have everything set up quickly.
To get started, choose one of the risk strategies that range from "Ultra-Conservative" to "Opportunistic", deposit money, and off you go. From the moment you click "Start", Portfolio Manager buys P2P loans with different credit ratings and amounts in your portfolio that match your chosen risk-return strategy.
How quickly your deposited amount is invested significantly depends on the current availability in the market. Only when borrowers apply for loans, and we confirm them, Portfolio Manager can make investments for you since you are funding a part of these loans (You become the bank!). However, due to having a large number of investors and borrowers on our platform there is usually a steady flow of availability. Even so, it may take a few days if you want to invest large amounts of money all at once.
In the next section, we'll explain the heart of Portfolio Manager, the risk-return slider, which you should adjust to your needs before clicking "Start".
The risk-return slider: Choose a risk strategy
The risk-return slider is the heart of Portfolio Manager. First, you’ll need to select which risk-return plan best suits your goals. Drag and drop the slider to one of the options, ranging from “Ultra Conservative” to “Opportunistic”. If you are unsure, choose a "Balanced" portfolio first, it’s the most popular setting with our investors. Since Portfolio Manager offers comparatively few settings options, your decision is of paramount importance here.
The position of the slider determines which loan ratings will be represented at what frequency and with what amounts in your portfolio. Therefore, decide with care. If you are risk-averse at all and are satisfied with lower returns, adjust the risk-return slider further to the left in the direction of the conservative choices. If you’re not afraid of more volatility and want to take the chance of higher return opportunities, you're more likely to place the slider on the right (the opportunistic side).
As you move the slider and change your starting capital, monthly payments or investment period, the values which give you a preview of the expected distribution of the loans are also adjusted. This preview can be displayed by rating or country. Try out the different settings until you find the ideal risk-return strategy for you.
In the next section, we’ll tell you what else Portfolio Manager can offer.
Portfolio Manager Settings
To fully benefit from Portfolio Manager, you should also know about the other settings.
In addition to the risk strategy, you can also determine the maximum bid size and the maximum investment per loan. If you want to keep it simple, you can have them calculated automatically by clicking "Calculate automatically". Depending on the available capital, the "Suggested investment size" indicator shows the amount Portfolio Manager recommends per investment. You can quickly change this amount to a higher or lower figure. If you choose a higher amount, keep in mind that your portfolio could be less diversified and the risk increases due to a smaller spread of your capital.
Buying loans on the Secondary Market
In the settings option, you can choose whether Portfolio Manager will buy loans from other investors on the Secondary Market in addition to newly issued ones. If you activate this, only current loans will be purchased at the time of the transaction (in other words, it will not buy loans that are overdue or have defaulted). Portfolio Manager never acquires loans at a premium – only those at par or a discounted value.
The bid size allows you to set the maximum size of a position in your portfolio. The smallest bid amount you can set in Portfolio Manager is €5. Even so, it is often the case that Portfolio Manager's bid is lower than that (e.g., €1) when the demand for a loan is high. This happens when more investors are bidding on the same loan than a distribution of €5 per investor could be achieved.
Since we want you to realize a portfolio according to your chosen risk-return strategy and not to compete with other investors through limited access to specific loans, bids from €1 are being implemented automatically by Portfolio Manager. No additional intervention is needed from you.
Max investment per loan
If you set the "Max investment per loan" higher than the "Bid size", it may happen that the Portfolio Manager bids on the same loan multiple times. Your investment in one loan is then divided into several parts. In other words, auctions receive more than one offer from you. This approach can certainly be beneficial. For example, it is possible to sell single parts on the Secondary Market later, rather than the whole loan. On the other hand, you could argue this gives you less diversification overall.
What is the spare cash balance?
The amount you set as spare cash will not be invested. It will always remain on your Bondora account and is at your disposal. You can use this reserve as collateral to withdraw to your bank account at any time, or you can use it to buy loans yourself on the Secondary Market. If your Bondora account contains less cash than your chosen spare cash balance, Portfolio Manager will not reinvest in any more loans until the desired reserve is exceeded. As a result, any amount in your Bondora account that exceeds the set reserve will be reinvested.
Portfolio Manager not only buys new loans for you, but it can also take care of selling them again automatically when you need cash or when you want to stop investing with Bondora. Just scroll down to the bottom of the Portfolio Manager page and expand the "Sell loans" section. Here, you enter the amount of cash you want to liquidate in your portfolio.
How long the selling process takes will depend on the market demand and the status of your loans. It’s important to remember that you will miss out on profits by selling loans, as with this approach you can only expect the loan's current principal amount and not any future interest. Furthermore, you should be aware that current loans are sold much faster than those that are defaulted (due to investor demand).
It’s likely that a higher number of overdue loans will remain in your portfolio which cannot be sold as fast and therefore may potentially generate losses until recoveries generate a cash flow back into your portfolio.
If you decide to liquidate your investments on Bondora, the most profitable way to do this (other than waiting until the loans reach maturity) is to stop any reinvestments and withdraw interest and principal repayments on a regular basis to your bank account.
Reasons to use Portfolio Manager
Portfolio Manager is a semi-automated service Bondora offers to buy investments in personal loans. You don’t need any prior knowledge to use it because you can set up everything with a few clicks and gets started right away without any worries.
You can customize the level of risk in your portfolio by adjusting the risk-return slider. It’s simple! If you have already deposited money into your Bondora account, Portfolio Manager starts investing immediately.
Use Portfolio Manager if you're investing with a long-term outlook (e.g., five years), if you want to start easily and quickly, and don’t want to worry about the finer details.
Go & Grow
Go & Grow works as easily as (if not easier than) traditional investment methods while giving you an impressive return of 6.75%* p. a. You simply add money to the account, then you can view and track your return on a daily basis. What’s more, there is no minimum term to hold your investment— meaning you can liquidate your account with ease. Sounds like your cup of tea? There’s more.
For years, there has been a huge investor demand for a product that is simple, has a reliable net return, and is offered by a trusted platform. Go & Grow opens up peer-to-peer (P2P) investments to the world. It provides key benefits that our existing products (Portfolio Manager and Portfolio Pro) do not offer. More specifically, it appeals to those who want “no-hassle” investing with low risk, faster liquidity, and automated features.
Go and Grow is for the dreamers. When you create a new Go & Grow account, you have to set a goal and a purpose. The purpose of your investment may be a large purchase such as a wedding or a new car (lucky you!), a trip around the world, early retirement, or something unique. Our goal-setting feature is there to help you determine how much money you want to accumulate and by what date. Go & Grow will keep you updated as to whether you are on track to achieve your goal or if you have fallen behind.
Use Go & Grow if you’re new to P2P, if you want fast liquidity and a reliable net return.
With Portfolio Pro, you already have much more control over the types of loans that will be part of your portfolio. You can use it to specify a range of criteria, which means you already have to know what filters you want to set up. For example, select the country in which you would like to buy peer-to-peer loans, which Bondora ratings you would like to include and which loan durations you prefer.
Similar to Portfolio Manager, you can set the maximum investment per borrower, the maximum bid size, and the spare cash balance. In addition to that, you can determine the interest rate that you desire from a loan and the portfolio limit up to which Portfolio Pro should operate.
Also, with this service, you get an instant preview of the expected return each time you adjust your criteria. Try it out - select and deselect different fields to see how the expected return changes and choose a setting you feel comfortable with. For more information, read the Portfolio Pro Guide.
Use Portfolio Pro if you have a clear idea which loans you want to have in your portfolio based on the statistics you have studied.
The API allows you to access different data points of borrowers in even greater detail than with Portfolio Pro, and to make your investment decisions based on them. You can include fields such as income and obligations, employment, age, education and more in your loan selection process. This way you can implement your very own individual investment strategy.
To use the API, you will need advanced programming skills and a detailed plan about which of the numerous data points should be relevant to your unique strategy. The API is used by approximately 1% of our total investor base.
We hope we've been able to help you with this guide and answer most of your Portfolio Manager questions. If you are still unsure, the Investor Relations team will provide you with first-class support in English, German, Estonian and Russian. Write an e-mail to [email protected] or call +44 1568 63 0006.
*As with any investment, your capital is at risk and the investments are not guaranteed. Before deciding to invest, please review our risk statement or consult with a financial advisor if necessary.