Go & Grow 2021 Q2 Review: A Road of Opportunity

Since its inception, Go & Grow has been Bondora’s most popular investment product for the past three years. Launched in June 2018, it has over 136,000 happy investors. The reason for its popularity is clear; people want a simple service that’s inexpensive and easy to use to grow their money. And that’s precisely what Go & Grow is.

Every quarter, we give investors a more detailed look into what makes Go & Grow successful: its portfolio distribution. Let’s dive into Go & Grow’s Q2 portfolio:

Credit ratings

Investing across different credit rating categories is the key ingredient to our diversification recipe. Diversification in Go & Grow stretches across eight different credit rating categories, starting from AA to HR.

Go & Grow Portfolio Overview – September 2021
Go & Grow Portfolio Overview – September 2021

The bulk of Go & Grow’s portfolio comes from D-rated loans, with 24.8%. This is a change from what we saw in Q1 when E-rated loans had the largest share. The substantial increase in D-rated loans (+5.9% from last quarter’s review) correlates with the exponential growth of Finnish loans. (All Finnish loans currently fall into the D-rated category.)

E-rated loans come in second with 20.5%, and F-rated loans have the 3rd biggest share with 18.1%.

The outliers HR-, A- and AA-rated loans continue to have the smallest distribution across the Go & Grow portfolio, with the former having the smallest share.

Country of origination

Overall, we’ve seen solid origination growth during 2021, and Q2 was no exception. Since our last in-depth review, originations have grown by €3,860,557. Put into perspective, that’s a quarterly increase of nearly 50%!

Estonian loans grew by 3% from last quarter, now making up 56% of loans. Finnish loans have been growing exceptionally since restarting in November 2020 but still make up a solid 35% of loans.

Due to the pause on Spanish loan originations, Spain still accounts for the smallest share of loans. But, we are happy to announce that we relaunched Spanish loans on 15 September 2021! We know it’s been a long wait, and we appreciate your patience. We are slowly increasing originations, but you can expect to see more Spanish loans available over the next coming months.

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

Rating and country

Below, you can see the total distribution of originations across Bondora (not only Go & Grow) in August 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 – August 2021 (€11,584,049 total originations).
Total Bondora origination by rating and country – August 2021 (€11,584,049 total originations).

Investment goals

When creating a Go & Grow account, investors can choose the main goal they’re saving for. The chosen investment goals won’t affect your returns, but it’s interesting to see why people invest. The clear majority is Extra income (58%), but this has to be taken with a grain of salt, seeing as it is the default selection.

In Q2, Retirement (11.7%) and Rainy Day (11.5%) remain in 2nd and 3rd place, with the former increasing by 0.3%. The pandemic could very well have encouraged people to set up emergency funds to prepare for the unforeseeable future.

After that, Big Purchase (9.7%), Travel (5.0%), and Children (4.1%) follow. All three goals saw slight increases from Q1, but they remain very similar to the previous quarters’ figures.

Go & Grow investors' goals – September 2021
Go & Grow investors’ goals – September 2021

Why Go & Grow?

Go & Grow is our simplest way to invest. We like to keep things plain and simple. And we believe that’s what makes Go & Grow great. There’s nothing complicated; it’s super easy to use and the simplest way to grow your money online.

Here are five other top benefits from using 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

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 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 interests. 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 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, 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.

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.

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