Introducing net returns and diversification data

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We want lending at Funding Circle to be as straight-forward as possible so we’re always looking for ways to improve the information we provide you. Having spoken to many investors over the past few months, we can see there are some valuable changes we can make:

  1. Displaying net returns after fees and bad debt: to show an average across all investors and also showing individual net returns in your account.
  2. More information on the distribution of net returns across investors and how these returns vary by level of diversification: allowing you to compare the returns for those investors lending to a handful versus those lending to hundreds of different businesses.

This new information will not only help you make more informed lending decisions, but make it simpler to track the returns you earn as a result. We’re part-way through these changes and you’ll see them across the site in the coming weeks, but in the meantime we wanted to share a preview with you.

The average net return (after fees and bad debts) across all investors who have been lending for more than 180 days currently stands at 6.2%. 75% of investors that are lending to at least 100 businesses (with a maximum exposure of 1% of their total lending to any one business) have earned more than 6% net per year. The charts below show the distribution of net returns for investors who have lent to a least 100, 50 or 10 businesses with a 1%, 2% or 10% maximum exposure respectively.

You can read more about the net returns and diversification calculations, the methodologies used and their limitations in our post on the Funding Circle forum, together with comments from other investors.

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– See more at: https://www.fundingcircle.com/about-us/our-blog/introducing-net-returns-and-diversification-data#sthash.IkS8CKA6.dpuf

Jack Pritchett

Senior Communications Manager