Create an Auto Invest Portfolio on iuvo and set it up correctly
Last updated on 16 May 2021 by Reza
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On the platform iuvo* you can invest in P2P loans fully automatically with an Auto Invest portfolio. You are not limited to one portfolio and can create multiple portfolios. For each portfolio you can set exactly in which P2P loans you want to invest and also determine whether returned funds from interest and repayments should be reinvested.
The settings of your Auto Invest portfolio are important. If you set the wrong settings, you will invest in P2P loans that you did not want to invest in. In the worst case, your Auto Invest Portfolio will not start investing at all.
In this article we will show you exactly how to create an Auto Invest Portfolio and how to make the right settings.
Create a Auto Invest Portfolio
To create an Auto Invest Portfolio, click on " Autoinvest" in the menu on the left , then click on the button " Createa new portfolio for automatic investment".
You will then see all the settings that you can create for your Auto Invest Portfolio. iuvo* does not make any default settings for you and does not offer any predefined automatic investment portfolios. You have to set up your Auto Invest Portfolio yourself.
Set up iuvo Group Auto Invest Portfolio correctly
Note: The content of this article is for general information purposes only and does not constitute investment advice or a recommendation. The information is based on our own experience and financial knowledge. Every successful investor should inform himself extensively and make his own decisions tailored to his personal goals.
You can make a total of 18 settings for your Auto Invest portfolio. On the one hand, this offers you many design options, but on the other hand, it can make you feel a little insecure at first glance.
You can make the following settings:
- Portfolio name: What your Auto Invest portfolio should be called.
- Investor account: From which account to invest (and in which currency)
- Maximum investment in one loan: Maximum amount per loan
- Risk rating: In which ratings to invest (from A to HR)
- Remaining installments: How many installments are still outstanding
- Contributions paid: How many payments have already been made
- Loan type: Loan types (consumer loans, real estate loans and others)
- Loan status: On time or delayed
- Repurchase Guarantee Days: After how many days the repurchase guarantee takes effect
- Loan renegotiation: Extended or not extended
- Portfolio size: Amount invested
- Minimum account balance: Minimum amount of money in the investment account
- Interest rate: Minimum or maximum interest rate of the loans
- Installment type: At what interval installments are paid
- Available for investment: amount of credit still available for investment
- Country: Bulgaria, Spain, Georgia, Latvia, Poland, Romania and Russia
- Originator: In which loans from loanoriginators are to be invested in
- Remaining term: How long the loans will run
iuvo Auto Invest portfolio settings for conservative investors
You should set up your Auto Invest portfolio in a way that you can expect stable returns and few delays in loans. Also, your money should be available quickly without having to accept price markdowns.
The iuvo* repurchase guarantee pays investors back their invested capital, but the unpaid interest is not refunded. A high number of repurchased loans will result in a high amount of interest lost over time.
Even though all loans on iuvo (as of February 2021) are issued with repurchase guarantees, it is important that you keep the risks of P2P loans in mind and make sensible decisions.
We will show you which settings you can use to invest in loans that meet the requirements of a conservative investor.
Maximum investment in a loan
To invest in a P2P loan, you must invest at least 10 € per loan on iuvo*. For investment amounts between 5.000 - 10.000 € a minimum amount of 10 € - 20 € has proven itself (the more money you invest, the higher the minimum amount can be). The background is that you should spread your investments in P2P loans as far as possible.
Risk assessment (rating)
iuvo* divides the mediated loans altogether into 6 ratings A, B, C, D, E and HR (where A stands for very good). iuvo indicates the default probabilities (in %) for the respective rating as follows:
- Rating A: 0 - 2 %
- Rating B: 2 -10 %
- Rating C: 10 - 18 %
- RatingD: 18 - 25 %
- RatingE: 25 - 35 %
- Rating HR: over 35
As a conservative investor, you should focus on loans with ratings A and B.
In the beginning iuvo focused on consumer loans from Bulgaria and Romania. Even today, loans from Bulgaria make up a very large share of the loans brokered.
In our opinion, it is generally advisable to focus on the strengths of a platform. Since iuvo obviously has the longest track record of brokering consumer loans, you should focus your investments on it. In the Auto Invest portfolio, these are the loan types Short Term Loans and Personal Loans.
You should only invest in loans with Current status. These are loans where there have been no delays.
Repurchase guarantee days
Since you are not compensated for lost interest on iuvo* by the repurchase guarantee, it would make sense to invest mainly in loans with repurchase guarantees that take effect after 16 and 30 days. In practice, however, this does not make sense, because the vast majority (almost all) of the loans are offered with repurchase guarantees that take effect only after 60 days.
Therefore, you should set 16, 30 and 60 days.
Renegotiation of the loan
In this setting you can choose to invest in loans that have adjusted their payment schedules due to potential difficulties. Some borrowers have deferred their payments on iuvo during the Corona crisis.
You should select without extension .
The credit default risk on iuvo* can be well controlled by the risk assessment (ratings), therefore no settings are necessary for the minimum and maximum interest rates.
Only countries within the European Union can be considered as countries . Especially with developing countries (or countries with a weaker economy) unforeseeable events can occur, which can hit you hard as an investor.
With this setting you should only select the countries Bulgaria, Spain, Latvia and Poland .
On iuvo approx. 50% of the arranged loans do not run longer than 6 months.
In a short test, we looked at how many of the currently available loans run for only 1 month. Out of 22,365 loans, 325 (approx. 1.5%) remained with a term of 1 month, 1,656 (approx. 7% ) with 2 months and 4,175 (approx. 18.5%) with 3 months.
From a maturity of 3 months, there were enough loans left that had good ratings and were issued within the European Union.
We therefore consider a maturity of up to a maximum of 3 months to be reasonable. 4 months would also still be within reason.
Summary for conservative investors
- Maximum investment in a loan 10 € - 20 € depending on the total investment amount
- Risk assessment (ratings) only loans with ratings A and B
- Loan type only consumer loans (short-term loans and personal loans)
- Only loans with status Current
- Repurchase guarantees that take effect after 16, 30 and 60 days
- No loans where there has been a renegotiation
- Only loans within the European Union
- Minimum 0 months and maximum 3 months remaining term
The right settings for risk-averse investors
If you are looking for high double-digit returns, iuvo* can offer you a lot of loans. When investing with higher risks it is important that you are not thrown off trackby too many loan defaults.
With which settings you could create your Auto Invest portfolio as a risk-loving investor, we will take a look together.
Maximum investment in one loan
Especially with a risk-tolerant strategy, it is important that you are not hit too hard by individual loan def aults. On iuvo there is the added feature that you don\'t get compensated for repurchased credits. Many repurchased items will therefore certainly reduce your return. To limit the risk of individual credits, you should only invest a minimum of 10 € per credit.
Risk assessment (rating)
There is a misconception among many investors that more risk always leads to more return. But this is simply not true. This can be explained by the decreasing marginal utility. Accordingly, after a certain point, more does not automatically lead to more; in the extreme, moreand more evenleads to less and less.
Experiences on other platforms (and with bonds, for example) have confirmed that investors receive the highest risk-adjusted returns (ratio return / risk) for loans with medium ratings .
Invested amount per rating
On iuvo* you should therefore invest primarily in loans with ratings C and D.
iuvo has the longest track record with consumer loans. The platform has grown up with this loan type. We would recommend you to invest mainly in consumer loans. You can also invest in other loan types.
You should invest in loans with the status Current and in arrears. Then you will also invest in loans that are offered with discounts and you will be able to take advantage of further potential returns.
Repurchase guarantee days
The vast majority of loans on the platform are brokered with a repurchase guarantee that takes effect after 60 days. Consistently, you can set to 16, 30 and 60 days.
Renegotiation of the loan
You can invest in loans with and without extension.
Since you have specified under Risk assessment (Rating) setting that you only invest in loans with ratings C and D, you have indirectly also specified the interest rates. You can leave this setting as it is.
You can and should invest in all countries. Especially loans from developing countries sometimes offer twice as high interest rates as the same loans arranged in countries with strong economies.
It would not be advisable to invest only in the countries with the highest interest rates, you would be taking a very concentrated risk.
You can expect to receive higher interest rates on loans with longer maturities. To benefit from this, you should set a minimum maturity of 6 months.
Similar to risk scores (ratings), the highest risk-adjusted returns for loans with medium matur ities are also true for maturities. It may therefore make sense to set 12 or 16 months as the maximum term.
In case you need to get your invested capital quickly, you can sell the loans on the secondary market.
Summary for investors who are willing to take risks
- Maximum investment in one loan 10 €
- Risk assessment (ratings) only loans with ratings C and D
- Loan type mainly consumer loans (short-term loans and personal loans)
- Loans with status Current and in arrears
- Repurchase guarantees with 16, 30 and 60 days
- Loans with and without renegotiation
- Loans from developing countries (possibly overweight) and the European Union
- Minimum residual maturity 6 months and maximum 12 to 16 months.
Control Auto Invest Portfolio
Your Auto Invest portfolio will start investing immediately after you create it. It is possible that you will have invested your investment amount within a very short time. It depends on your settings and how many credits match your settings.
If it takes a little longer, you should not panic immediately. Maybe there are not so many credits available on the platform or you have chosen your settings in such a way that it is to be expected that it will take a little while until your investment amount is fully invested.
Auto Invest Portfolio does not invest
Sometimes investors complain that their Auto Invest Portfolio does not work because it does not invest . This problem can often be solved by adjusting the settings.
You can view all available loans on iuvo* under the "Primary Market" section. There you can enter almost the same information as in your Auto Invest portfolio.
For example, if you want to create a conservative Auto Invest portfolio that only invests in loans from European countries with ratings A and B, and you set a minimum return of 15% p.a., no loans will be offered to you.
If your Auto Invest Portfolio does not invest, you can quickly test with the primary market how to adjust your settings so that your Auto Invest Portfolio starts investing for you.
If you see too few loans or no loans at all, you need to adjust your settings.
How often should I check my Auto Invest portfolio?
The frequency with which you should check your Auto Invest portfolio depends on the average maturity of the loans in your portfolio.
If the average maturity is 2 weeks, you should check your portfolio every 2 weeks. If it is one month, you should check your portfolio 1 time per month.
If you want to have as little effort as possible with your Auto Invest portfolio, don\'t forget to activate the setting that returned funds should be reinvested automatically.