LENDINGCROWD has unveiled two new product features designed to improve diversification for investors.
The Scottish peer-to-peer business lending platform said investors in its Growth Account and Income Account can already create diversified portfolios, but with the addition of the AutoBalance and AutoQueue functions, LendingCrowd will automatically increase diversification by reducing the proportion of funds that can be invested in any one loan.
AutoBalance will involve the sale of holdings in loans that investors are over-exposed to, and the purchase of holdings where they have too little exposure.
Previously, investors in LendingCrowd’s Growth Account and Income Account had no more than five per cent of their funds invested in an individual loan but with AutoBalance the target exposure will depend on the portfolio value.
Portfolios of more than £5,000 will have a 0.5 per cent maximum target exposure. Between £2,000 and £4,999 it will be one per cent, and £1,000 to £1,999 will be two per cent.
To maintain these new exposure levels when investors deposit cash in their accounts, LendingCrowd’s platform also has the ability to use its new AutoQueue feature.
If a portfolio is already at its target exposure, cash may be “queued” to automatically invest in more loans as they become available on the platform’s Loan Market.
“LendingCrowd has been at the forefront of innovation in the fintech investing and lending space since we launched almost five years ago,” Stuart Lunn (pictured), founder and chief executive of LendingCrowd, said.
“AutoBalance and AutoQueue will ensure that investors in our Growth Account and Income Account do not have too much money invested in individual loans.
“Diversification – not putting all your eggs in one basket – is key to mitigating risk. Our platform will automatically create the greatest diversification possible and prevent investors’ funds from becoming overly exposed to any one loan.
“We believe that diversification will be a key element of future regulation and we are keen to be at the forefront of best practice.”