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The Mintos marketplace offers investors the opportunity to create a well-diversified investment portfolio in a single marketplace. On Mintos, you have the opportunity to diversify across different type of loans, loan maturities, geographies, currencies, return rates, risk-levels and loans with and without the buyback guarantee and also across different loan originators. You can find a detailed explanation on each of these steps here.
One of the most common suggestions for diversification with peer to peer investing is to diversify across different platforms. In most cases, peer-to-peer lending platforms only offer investors the opportunity to invest in loans originated by one loan originator – themselves. However, if you invest through Mintos, you get instant access to a variety of loan originators within a single marketplace. This means, you essentially have access to the capabilities of many different ‘platforms’ in one place.
Investing in loans from different loan originators
Mintos is growing rapidly, and we constantly have new loan originators joining the marketplace. Currently, we have 38 different loan originators from four continents – Africa, Asia, Europe and South America. The loan originators on Mintos all offer investors something different – loan types, return rates, loan duration, geographies and currencies. They are all at different stages of development, from younger and rapidly growing companies to larger corporations which have been operating for more than a decade. By investing in loans from different loan originators, you are not only opening yourself up to more investment opportunities, you are also spreading your risk in case a loan originator experiences financial difficulty. This is important as the loan originator services the loans on behalf of the investor. If the loan originator experiences financial difficulty then it may not be able to collect payments from the borrowers effectively, meaning investors may experience delays in receiving their returns. In addition, in the unlikely event a loan originator goes bankrupt, it would not be able to honour the buyback guarantee. However, on Mintos, we have several layers of risk mitigation and agreements in place to protect you from missed loan repayments and defaults, which you can read more about here.
Diversification does not mean that you should just invest in anything. You still have your investor preferences. On Mintos, we have a great feature that can help you create a diverse portfolio whilst still investing in exactly what you want – Auto Invest. Auto Invest automatically implements your chosen investment strategy. All you have to do is select your investment criteria – for example, which loan originators you would like to invest in, what currency and loan duration. Whatever you choose, Auto Invest will automatically invest in suitable loans. You can access Auto Invest at any moment and follow your portfolio activity in real time to make sure it is working according to your investment goals.
You can create a new portfolio under the “Auto Invest” tab in your investor account.
How can you invest in loans from different loan originators?
On Mintos, if you invest manually and want to invest in loans from a particular loan originator – or multiple loan originators – you can sort the loans using the “Loan Originator” filter option on the left-hand side of the Primary and Secondary Market. When you select the loan originator/s you prefer, only loans from the selected loan originator/s will be available for investment.
If you use Auto Invest, you can also select which particular loan originators you want in your investment portfolio. If you would like to include all loan originators or clear all loan originators from your portfolio you can choose “Select/Clear All”.
There is a very handy tool on Auto Invest which allows you to easily diversify across loan originators – the Auto Invest diversification feature. When enabled, the diversification feature will automatically set an equal investment limit for each loan originator included in the portfolio. For example, if you have an Auto Invest portfolio with ten loan originators selected, the diversification feature will set a 10% limit of the total portfolio for investment in loans by each of the ten loan originators. This feature can also be activated in existing Auto Invest portfolios.
You can customise the percentage of loans from each loan originator by selecting the numeric value next to the loan originators name.
With Auto Invest you can create multiple AI portfolios – one for each set of your preferences. You keep the control, but also reap all the benefits as diversification becomes easy and efficient.
It is also important to remember that whilst creating a diversified portfolio is important, this is not a one-time decision or action. Once you have created your investment portfolio that is diversified with an amount of risk you are comfortable with, you should continue to do maintenance on it. This means monitoring your investments consistently for changes in strategy, relative performance and risk. It is recommended to revisit your investments frequently to maintain the risk level you have chosen and correct any drift that may happen as a result of market performance.
There are many ways you can diversify your loan portfolio on Mintos – seven to be precise. You can diversify across loan types, maturities, return rates, countries, currencies, loans with and without the buyback guarantee and loan originators. Take advantage of the opportunities and flexibility the Mintos marketplace can offer you and create a well-diversified portfolio now!