You can use Portfolio Manager to automate the investment process. In order to set up or edit your Portfolio Manager you need to navigate to its page and choose your preferred strategy and settings, click "Start" and agree to its terms and conditions (Portfolio Manager agreement).
- Investment size calculation tailored to meet your targets
- Advanced settings that let you over-ride each individual variable in our investment size formula
- Option to split your investment into multiple smaller bids to make it more liquid
- Control through granular risk-return strategy options
- More inventory as Portfolio Manager will be also buying from the Secondary Market
Investment size calculation
The suggested investment size calculation takes into data specific to your portfolio and strategy to arrive at the suggested investment size. The algorithm includes six variables: (1) point of diversification (X – by default 200); (2) the desired capital deployment period (Y – by default 2 weeks); (3) the number of loans expected to be available for investment over this period (Z); (4) your total deposits (T); (5) your available cash balance (C); and (6) your expected cash inflow over the defined deployment period (CF).
The suggested investment size is calculated by dividing your cash balance and expected cash inflow over the defined deployment period with the number of loans expected to be available during this period. In simple terms the suggested investment size equals (C + CF) / Z. The minimum investment is 5 EUR. The maximum investment is calculated by dividing your total deposits with point of diversification (T / X). Point of diversification is the number of loans that you should include in your portfolio to have a reasonably diversified portfolio.
Advanced settings that let you over-ride each individual variable in our investment size formula
Investors who feel that the default settings do not suit them can override most of the individual variables in the formula above. You can override point of diversification and capital deployment period. You can of course set your own minimum and maximum amounts instead of using our formula. Additionally you are able to define the free cash balance you would like to keep on your account for withdrawals.
Option to split your investment into multiple smaller bids to make it more liquid
Investors on Bondora are not all investing with the same amounts of capital. Therefore some investors are making considerably larger investments into single loans compared to others. We have an option to split your investments into smaller bids in order for larger investors to be better able to liquidate parts of their portfolios. In case your investment per loan is 100 EUR and you have defined the bid size to be 15 EUR then the system will make 7 bids into a loan, 6 bids of 15 EUR and 1 bid of 10 EUR.
Control through granular risk-return strategy options
Investors looking to increase or decrease the available investment pool will be able to do so by choosing among 9 strategies. We are adding Ultra Conservative as well as Opportunistic strategies as well as options in between the 2 new and 3 existing strategies.
Please remember that these strategies remain within the context of Bondora and therefore an Ultra Conservative strategy cannot be compared with an ultra-conservative stock or bond strategy (e.g. blue chips or German bonds). Bondora should be viewed as higher yield part of your portfolio and total portfolio allocation towards Bondora should be set based on this assumption.
Expected portfolio distribution charts include existing loans to improve estimates
The expected portfolio distribution charts calculation includes both your existing and new loans. The loans that are expected to be added to your portfolio over the desired allocation period are added to the existing portfolio to arrive at the estimates. The estimates for new loans are calculated based on your chosen risk-return strategy and recent market statistics.
Portfolio Manager will be also buying from the Secondary Market
We have been steady increases in secondary trading since we introduced our API. However the trading still considerably lags behind Primary Market volumes and available inventory as most investors are not using the Secondary Market. We are addressing the liquidity constrain by adding Secondary Market inventory to the pool available for the Portfolio Manager. This step will both increase the liquidity for existing investors as well as allows new investors to buy into seasoned and lower risk assets.
The Portfolio Manager will buy only loans that are not overdue (principal nor interest) at a price equal to the principal balance or below. No trades will be made above par or on overdue loans until it’s possible to completely harmonize the Primary and Secondary Market pricing.
In case you are interested only in new originations then you can turn off this option through the Portfolio Manager Advanced Settings.