Diversification & Reallocation of funds in the Pool

Diversification of funds 

The funds of an investment in the pool are split proportionately to the loan amount across all the pool's performing loans. To achieve this:

  • Both investment and loan monetary amount is expressed as integers by multiplying by 100 so that, for example, the value of £0.01 becomes 1 and £100 becomes 10,000 etc.
  • Each investment/loan amount is represented as an integer fraction of your investment amount multiplied by the loan amount divided by the sum of all loan amounts in the pool.

As an example, let's assume that we have a pool consisting of two loans with a loan amount of £100 and £200 respectively and that a user invests £10 into the pool, the split would become (1,000*1,000)/3,000 in the first loan and (1,000*2,000)/3,000 in the second. It is worth noting that we do not round off the values but store the exact representation. Further, the split is the same whether you invest £0.01 or £ 1,000,000.

The loans and the respective loan amounts will change over the investment period. Whenever a new loan is introduced or repaid, the existing investment will be automatically diversified to reflect the changes.

Should a borrower in one of the loans not meet their financial obligations and the loan goes into default, the loan will be removed from the pool to prevent new investors from investing. The funds of an existing investor will be separated until a solution has been reached with the borrower. Under these circumstances, interest will continue to be paid. If the investment matures before the funds in the loans in default have been recovered, only the funds in performing loans will be received on maturity and the other funds after recovery.

Reallocation of funds 

  • With regards to Auto-Invest and IF-ISA, we take steps to achieve diversification.
  • Kuflink will manage your portfolio which may include re-allocating your funds and therefore diversifying your portfolio as we see fit in order to give you exposure to a range of Borrowers and Loan Parts as new opportunities arise.
  • There will be specific trigger events, such as new loans entering the pool and repayment of loans, which will trigger a reallocation of your funds across the loans. However, if you have funds in a defaulted loan or loans, these funds will stay within the loan(s) on a triggered reallocation event, until the borrower agrees to new terms or funds are repaid. 

*Capital is at risk and Kuflink is not protected by the FSCS. Past returns should not be used as a guide to future performance. Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed. Tax rules apply to IF ISAs and SIPPs and may be subject to change. Kuflink does not offer any financial or tax advice in relation to the investment opportunities that it promotes