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What is Auto Allocation (AA)?
This convenient service enables all qualified investors to set their investment preferences and participate in a campaign without having to login to the platform. Subscribing to this service gives you a unique AA contract ID number which is allocated on a first come first serve basis.
An investor can set investment preferences based on the following:
- Investment amount per campaign
- Total number of campaigns
- Investment frequency
- Note types
- Interest rate
Based on the above criteria and your Contract ID, your investment will be pre-allocated to the matching campaign subject to funds being available in your account.
Limitations of Auto Allocation
Auto allocation may help you participate in upcoming loans based on the criteria you have set but has its limitations. Below is a non-exhaustive list of some of these limitations that we are aware of::
1. As the auto allocation can only match your investment to a campaign when there are funds available in your MoolahSense wallet at a specific point in time, you may not be fully diversified across all the investment opportunity made available on MoolahSense platform. In other words, auto allocation cannot provide a fully diversified investment portfolio.
2. With debt investments, the upside on performing notes (i.e notes that make repayment on time and are fully paid at maturity) is capped at the agreed interest rate. Whilst the limited diversification offered by auto allocation helps prevent excessive exposure to a single Issuer, the cap on the upside may mean that the good loans may not necessarily offset losses on bad and doubtful loans.
3. Auto allocation is not weighted. This means that if your auto allocation criteria is SGD1,000/-, your rate of participation in a SGD200,000/- note is 0.5% whilst your rate of participation in a SGD50,000/- note is 2%.