Portfolio Pro Guide
Welcome to the Portfolio Pro Guide. Here, you will learn everything you need to know about Portfolio Pro and its unique settings and features. After, you can use the practical tips to make the most out of your investments.
We’ll explain step by step what you can use it for, what options are available, how to use them, how Portfolio Pro differs from our other investment services and more. Take the time to understand its functionality fully; you'll learn something new for sure!
What is Portfolio Pro?
Just like Portfolio Manager, Portfolio Pro is a semi-automated investment service from Bondora that allows you to manage your investment in peer-to-peer loans precisely. It offers more settings than Portfolio Manager, where you would almost get by just by clicking the start button. Portfolio Pro is used by investors who have a clear idea of the structure of their portfolio and want to more control over the type of P2P loans that they invest in. In the beginning, you’ll have to set up your criteria. From then on, Portfolio Pro takes care of the investment process on its own.
You can set up multiple portfolios with Portfolio Pro and name them as you like. This is useful if you want to capitalize on different strategies in your overall portfolio, limited to certain amounts.
Despite the ability to run multiple strategies within Portfolio Pro at the same time, we recommend you do not use Portfolio Manager concurrently as this increases the risk of duplication of bids.
Portfolio Pro settings
Here, we’ll talk about the different rules you can set up in Portfolio Pro. The first three options; country, Bondora Rating and the loan duration are just a small part of the settings. Each of these three main filters will have a significant impact on the risk-return profile of your portfolio.
In the Portfolio Summary section, you can see a preview of the future distribution and structure of your portfolio. As you change your chosen settings, the preview also changes. Try it out! Select a few filters and see how the expected return range, the composition of different loans change and exposure in different countries will change in line with your rules. To see more than the first three settings, you need to click on "Add rules" and you’ll find more options to specify your criteria.
So, there are a lot of options for you to choose from. Remember, the more rules you set, the smaller the number of available loans will be. Always keep an eye on your Portfolio Summary to make sure you can make enough investments.
Choose the countries you would like to include in your portfolio. As a reminder, the countries we issue loans in consist of Estonia, Finland, and Spain. In our blog, we keep you informed about the statistics we collect and how they differ between countries. Differences in data, recovery rates and interest rates can give you an idea of which countries you prefer to invest in.
For everyone we issue a loan to, Bondora assigns a credit rating to the loan which gives an indication of how likely they are to default on their payments. In other words, the Bondora Rating is intended to give you a simple indication of how likely it is that a borrower will not pay back the principal and interest when it’s due. The rating has eight levels ranging from "AA", which indicates a lower likelihood of payment default and are therefore the loans with the lowest risk. At the other end of the scale is "HR", these are the loans which we expect to have the highest risk of default. The Bondora rating is calculated from our own proprietary system using hundreds of different data points, with traditional sources such as credit reference agencies, population registries, and employment records. As well as this, we use non-traditional data like social media, national identity card data, how borrowers interact with our website and 100’s of more data points.
Since a rating is recalculated for each new loan, including for the same borrower, it is possible for the same borrower to have multiple loans with different ratings and interest rates at a time. Due to growing confidence in the assessment of the borrower, their interest rate on following loans with Bondora may be lower and a with better rating if he has paid his obligations in time. However, this is not always the case.
Our blog is an excellent source of information and analytics which dives into all of the interesting statistics every month. You can use this to help give you an idea of what ratings are most appropriate for your strategy.
Loan duration is a crucial factor for many investors and their strategy. Bondora generally offers durations between 3 and 60 months, although you will find the majority of loans we issue have a duration of at least 36 months. This is also due to our company philosophy – we are not a short-term loan provider. We believe that a borrower willing to commit to a loan for a longer period, at much better interest rates, is much more financially responsible than one who, for example, is willing to take a loan for the next 30 days at an incredibly high interest rate.
For investors, there are several reasons to prefer either short or long-term loans. Short-term loans mean that your money is available again earlier and then can be used for other things. However, this also means that the money is reinvested more often, which can result in waiting times and the money not working for you. In general, short-term loans come with a higher risk of default for the reasons we mentioned above. In contrast, long-term loans mean that you, as an investor, have better calculability and regularity of your income, but a disadvantage is your capital will remain illiquid for a longer period.
Please also note that the final maturity of a loan may differ from the initial as loans can occasionally be rescheduled or repaid early. We encourage you to consider Bondora as a long-term investment when using Portfolio Pro. In this way, you can also take advantage of the compounding effect and make real strides toward building your wealth.
Max investment per borrower
This setting determines the maximum amount you want to invest in an individual borrower since they can apply for more than one loan with Bondora. It shouldn’t be confused with the possibility of setting the maximum bid size (we’ll talk about what this is later).
If you set the "Max investment per borrower" higher than the "Bid size", Portfolio Pro may bid 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.
As you may not want to lend your money below a certain percentage, this rule allows you to specify an interest rate range for the loans you want to invest in. Setting this up is not mandatory.
Be sure to keep an eye on the Portfolio Summary section on the right-hand side of your page if you set this rule, as the number of available loans per month could fall sharply. The higher the interest rate, the fewer loans will be available, and the fewer investments will be made over time.
The Portfolio limit is the maximum amount invested in your portfolio. This amount does not apply to your entire Bondora account, but to this particular Portfolio Pro strategy that you are creating and naming. The Portfolio Pro overview lets you track how much money your portfolio has already invested. It is exactly this amount that you can limit with this setting.
Setting this rule makes sense if you want to invest your capital in Bondora using a variety of strategies and limit those strategies to a certain amount. You should view this as a form of risk management in your portfolio.
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 Pro is €1. Smaller amounts are not invested. If you enter a higher bid size (for example, €10), it’s often the case that Portfolio Pro's bid will be 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 higher distribution per investor can 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 Pro in these cases. No additional intervention is needed from you.
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 Pro 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.
Reasons to use Portfolio Pro
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.
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.
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.
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.
Any questions left?
We hope we've been able to help you with this guide and answer most of your Portfolio Pro 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. The yield is up to 6.75% p.a. Before deciding to invest, please review our risk statement or consult with a financial advisor if necessary.