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How p2p lender Bondora is outperforming the S&P 500 stock index since 2009

Pan-european p2p lending platform Bondora was founded in 2009 and ever since its inception it has been making stellar returns for its investors. And to many investors’ surprise the popular p2p lender has been outperforming the stock market and even the S&P 500, one of the world’s most important stock market indices. This is how it went…

Data transparent p2p lender Bondora

The beauty of Bondora is that it is the most transparent p2p lending platform around and it has made its loan data publicly available. This makes it possible to compare its lifetime return rates with other investment vehicles – like stock and bond investing – to find out (in hindsight) what indeed would have been the most profitable investment.

To do exactly that we decided to compare Bondora’s return rates with those of the S&P 500 index, one of the world’s most well-known stock market gauges.

And surprisingly Bondora outperformed the S&P 500 big time in the seven years the p2p lender has been around….

The S&P 500 stock market index

The Standard & Poor’s 500, often abbreviated as the S&P 500, or just “the S&P” is an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ. It is one of the most commonly followed equity indices, and many consider it one of the best representations of the U.S. stock market, and a bellwether for the U.S. (and hence world) economy.
The “Composite Index”, as the S&P 500 was first called when it was introduced in 1923, began by tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.

To compare the Bondora and S&P return rates we start our comparison in the year 2009, the year Bondora was founded.

S&P 500 Annual Return rates 2009-2015

The S&P 500 annual return rates between 2009 and 2015 are displayed below.

S&P 500 stock index annual return rates 2009-2015

Firstly, do note that there are return rates excluding and including dividend payouts.

For our considerations – comparing the performance of the S&P 500 with p2p lending performance – we will only look at the higher numbers that include dividends.

You can see that this annual return rate including dividends has fluctuated widely over the seven year window that we are considering. The lowest S&P 500 return rate was 1.30% (in 2015) and the highest 32.43% (in 2013).

The S&P 500 arithmetic average growth rate (AAGR) for 2009-2015 is 15.35% and the compound average growth rate (CAGR) for that same period came to 14.86%

Bondora Annual Return 2009-2015

Bondora started in 2009 as a p2p lender offering only loans in Estonia (EE). Then in 2013 it expanded its operations to offer loans in Spain (ES), Finland (FI) and a year later Slovakia (SK).

Bondora’s annual return rates across all these markets from 2009 to 2015 are displayed below in the bottom row (ALL). This total return rate per year is calculated as a weighted average across the different countries.

p2p lender Bondora's annual return rates 2009-2015. are they outperforming the S&P 500 ?

Though some countries experienced slight declines in returns in 2013 and 2014 the totals still represent double digit gains for every one of the last seven years.

Bondora’s annual average growth rate (AAGR) is 20.37%  compound average growth rate (CAGR) for 2009-2015 is 19.87%.

Outperforming the S&P 500

Now lets compare both of these investment options and see which one would have netted you a higher return since 2009. Find the comparison below.

p2p lending platform Bondora is clearly outperfomring the S&P 500 during 2009-2015

It is clear that in some years the S&P 500 index performed better and in some other years p2p lender Bondora would have given you greater returns.

In the bottom half of the table you can see that on average however Bondora would have given you a 5% higher return rate every year over the 2009-2015 period (5.02% or 5.03% depending on if you use the AAGR or CAGR) clearly outperforming the S&P 500.

What this concretely means for investments made in both products becomes clear from the last columns in the table. If you would have invested $10,000 in 2009 in both Bondora and the S&P 500 your money would have grown to $35,561 at Bondora and $26,374 at the S&P 500.
An investment at p2p lender Bondora therefore would have made you a higher absolute gain of $9,187 or a higher relative gain of (9,187/26,374)*100 = 34.83% over the entire 2009-2015 period.

That’s both a surprising and substantial difference where Bondora is clearly outperforming the S&P 500 over the period 2009-2015.

Conclusion: p2p lender Bondora vs. S&P 500 

 Logically these results are by no means a guarantee for the future. They do indicate however that p2p lender Bondora offers great returns that are capable of beating the S&P 500 returns. Investing in p2p loans therefore could make for a great addition to anyone’s investment portfolio. It increases ones diversification and could potentially even raise your total investment portfolio’s performance.

For more info on Bondora have a look here.