LendingCrowd, the only online lending platform based in Scotland, has launched two new features designed to boost diversification for investors’ portfolios.
LendingCrowd states that investors in their Growth Account and Income Account, both available as an IFISA, can already create diversified portfolios of loans to established British businesses. LendingCrowd has now launched “AutoBalance” and “AutoQueue,” which will automatically increase diversification within investors’ portfolios 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 overly exposed to, and the purchase of holdings where they have too little exposure. LendingCrowd states that previously, investors in their Growth Account and Income Account had no more than 5% of their funds invested in an individual loan. With AutoBalance, the target exposure will depend on the portfolio value, as shown below:
|
Portfolio value |
Maximum target exposure |
|
£5,000 and above |
0.5% |
|
£2,000 to £4,999 |
1% |
|
£1,000 to £1,999 |
2% |
LendingCrowd says that to maintain these new exposure levels when investors deposit cash in their accounts, their platform 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,” commented Stuart Lunn, LendingCrowd founder and CEO. “Our proprietary technology, developed in-house at our Edinburgh headquarters, allowed us to become one of the first platforms to offer an Innovative Finance ISA and means we can develop and launch additional account features rapidly and efficiently.”
Lunn emphasized that diversification 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.”
Founded in 2014, LendingCrowd matches investors looking for a greater return with small businesses seeking finance to grow. LendingCrowd has facilitated over 660 loans to SMEs across Britain, totaling more than £58 million, including over £14 million in Scotland.
LendingCrowd is backed by Scottish angel syndicate Equity Gap and the Scottish Investment Bank – the investment arm of Scottish Enterprise.