Funding Circle lowers returns to investors

PEER-TO-PEER business lender Funding Circle has lowered its projected returns on its Balanced and Conservative accounts following a recent review.

The Balanced portfolio now targets returns of between 5.5 and 6.5 per cent, down from the previous target of six to seven per cent. The Conservative portfolio is now projecting returns of between 4.9 and 5.2 per cent, down from five to 5.5 per cent previously.

Funding Circle’s Balanced account invests in the full range of businesses on the platform, while the Conservative account only lends to businesses which have been assessed as lower risk.

The projected returns were revised following Funding Circle’s most recent rate review, which takes into account a number of factors including its assessment process, the interest rates at which they lend to businesses and the performance of the loans.

In a blog post on its website, Funding Circle clarified that actual returns may be higher or lower than the projected return, and overall portfolio performance will depend on the number of businesses they are lending to, as well as external factors such as an economic downturn.

“These projected returns will affect your lending going forward, and do not affect any loans you already hold,” it said.

“We will review and if necessary, update the projected returns every three months. We display projected returns for the past five years of loans on our statistics page, and update these every three months.”R

Funding Circle has also updated its Summary page, to make it easier for investors to see how their portfolio is performing. Rather than seeing three different returns (gross yield, annualised net return and estimated fully diversified return), customers will now see only one figure in their account – the annualised return.