Introducing LendingRobot’s “Adaptive Portfolio Rebalancing” Feature
Our new Adaptive Portfolio Rebalancing (AdPR) feature is designed to improve investor returns on Lending Club by automatically buying and selling notes in order to increase a portfolio’s return. AdPR does this by:
- Constantly putting all the notes for sale on the secondary market. The sale price is calculated such that the net proceeds would be higher than the expected return when keeping the note, taking into account its overall probability of default, status (e.g. number of days late), maturity, and probability of early repayment.
- Continuously trying to buy ‘cheap’ notes on the secondary market. ‘Cheap’ means that considering its asking price, a note is likely to generate an expected return significantly above market average (here again, taking into account overall probability of default, status, maturity, etc…). At launch, we determined ‘significantly above market average’ to be more than 6% for conservative loans and 14% for aggressive ones.
AdPR is a premium feature available for “Fully Automated” Lending Club accounts with at least $20k in managed principal and access to the secondary market.
To utilize this new feature, clients can simply check one or both of the boxes now available in the “Strategy” section of your dashboard. Once checked, AdPR will be enabled as soon as LendingRobot is managing over $20,000 on their account. All AdPR activity is matched to your overall investment strategy.
New clients are opted into AdPR by default, and have the option to opt-out on the investment strategy page. After a LendingRobot account is created and the investment strategy is set using the simple “aggressive” to “conservative” slider, new clients have the option to opt-out of either automatic secondary market buying or selling by unchecking the appropriate boxes below the slider.
Notes bought on the primary or secondary market are clearly distinguished on the website, in the client dashboard, and in the daily activity email.
- Vanessa Hoying
- June 7, 2016
- 11 Comment