Statistics: Expected returns and competitive bid levels

We’re offering investors new data as part of our revised public and personal statistics page. The “Expected Return and Competitive Bid Level” chart creates new insights on our loans. The chart ties together three key metrics:

  • Bid Size
  • Expected Return
  • Loan Rating

Expected return and competitive bid levels

The chart illustrates the inverse relationship between loan ratings and the annualized expected return. As the rating drops the expected return rises. This dynamic is the risk/reward relationship at work. We’ve discussed this trade off in previous posts.

However, our investors might be surprised to see how bid levels rise as ratings increase. The higher rated loans, which offer lower relative risk, command greater bids. These loans are popular among our investors especially those choosing the “Conservative” approach with the Portfolio Manager.

The data also shows how in demand the AA rated loans are with investors. The bid size for these loans is €305, nearly double that of “A” rated loans. Our “B” rated loans drop to nearly one third this amount with a bid size of €105. The competitive bid level here is the bid amount that guarantees a successful investment into a loan. The bid competitive bid amount is calculated by taking into account the historical bid data. The value is recalculated after every two weeks.

The data is helpful in setting investors’ expectations regarding annualized expected return and competitive bid sizes.

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