Automation Portfolios – Understanding what they represent and tracking their performance

Portfolio returns are volatile so choose a combination of returns and volatility to make your decision 

Any investor looking to diversify their investment portfolio needs to look at investing in loans as an investment class. We have described in detail what you should do with your bigger portfolio in detail here (Why Loans should constitute 20% of your portfolio) . 

Once you have decided to invest in loans and open an account on Lending Club there are two options:

  1. Do manual Trading on Lending Club or use automation tools available on Lending Club
  2. Use services like Croudify to automate investing your investing on Lending Club.

Manual trading on Lending Club is time consuming and automation on Lending Club means choosing loans that might fit some buckets but are not optimized across various factors to give you the best returns.

– Abhishek Agarwal, CEO, Croudify

This dilemma means that investor either has to build their own models or use service like Croudify to invest intelligently.

At Croudify,  our ML based models (performance here) built on top of Lending Club ratings ensure that you can choose best loans in a particular bucket thus minimizing your losses and giving you comparable returns that you might hope to get, if you invest in a high risk portfolio.

In addition to loan optimization our lightning fast execution engine (details here) gives you an advantage over any automation on Lending Club portfolio automation (executes min 15 min after loan issuance), giving you a bigger pool of loans to choose from.

All this combines to give you a superior returns (1-2% net better returns without any cumulative calculations [details here}) compared to random allocation on Lending Club platform.

At Croudify we offer three automation portfolios. Their details are:

  1. Stable Portfolio : 70% A, 20% B & 10% C
  2. Balanced Portfolio : 40% A, 40% B & 20% C
  3. Growth Portfolio : 10% A, 50% B & 40% C

These portfolios represent the spectrum of portfolios that a person can build. While Lending Club does issue loans with Rating pf “D” & “E”, our portfolios avoid those loans as explained here

For an normal investor trying to choose a portfolio they need to choose a combination of return & volatility. Higher the return higher the volatility.

The returns reported above are non-cumulative. You can add ~2% of additional returns if you plan to reinvest the money you receive from investing the original principal.

Getting started is easy once you have decided which portfolio you want, just click below and on first screen choose Automate Investing.


Also published on Medium.

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