The latest Mintos Risk Score updates based on developments and data from the first quarter of 2024 are now live on Mintos.
Mintos has shared the general summary of the most recent quarterly changes.
This quarter, Mintos says that it “saw 5 increases in the Mintos Risk Score and 2 decreases.”
There were 5 subscore changes of 0.7 or more for Q1 2024. Information on all changes is in the spreadsheet, and for significant changes they provided a comment.
According to the significance Mintos see in each subscore, the weights of the subscores are Loan Portfolio Performance 40%, Loan Servicer Efficiency 25%, Buyback Strength 25%, and Corporation Structure 10%.
The Mintos Risk Score is “an aggregate of four subscores that are assigned to four different aspects of particular loans underlying a Set of Notes.”
These subscores rate:
- loan portfolio performance (the portfolio health and historical performance of the loan book)
- loan servicer efficiency (the operational efficiency of the loan servicer evaluated through its procedures and controls during loan issuance and collection processes)
- buyback strength (the buyback obligor’s ability to fulfill contractual obligations, meet
- liquidity needs, and capital sufficiency)
- cooperation structure (the legal setup between the loan issuing company and Mintos).
The Mintos Risk Score rates the risk level of “a particular Set of Notes on a scale from 10.0 (low risk) to 1.0 (high risk).”
The calculated score is rounded to 1 decimal place.
The Mintos Risk Score can “be withdrawn if one or more of the subscores is not available or simply when there are no loans available for investment from a specific lending company,” and this is expressed with the value “Score Withdrawn” or (SW).
For more details, check here.
Mintos noted in another update that effectively managing investment risks “is essential to protecting your portfolio and achieving your financial goals.”
Mintos has shared some strategies to consider:
- Diversification: This involves spreading your investments across different asset classes, sectors, and geographies to reduce exposure to any single risk. By holding a mix of stocks, bonds, real estate, and alternative investments, you can mitigate the impact of poor performance in any one area. Portfolio diversification to reduce risk is a fundamental strategy for managing investment risks. Learn more about risk diversification.
- Asset allocation: Adjusting the proportion of different asset types in your portfolio based on your investment risk tolerance and investment goals is crucial. A balanced mix of assets helps manage risks effectively. Discover how to set financial goals and allocate your assets accordingly.
- Regular portfolio review: Regularly reviewing and rebalancing your portfolio ensures it aligns with your risk tolerance and financial objectives. Market conditions and your personal situation can change, so it’s essential to adjust your portfolio periodically. Investment risks in 2024 may differ from past risks, so keeping an eye on trends is crucial. Explore various investment strategies to keep your portfolio on track.
- Investing in low-risk assets: Allocating a portion of your portfolio to low-risk investments, such as government bonds or high-quality corporate bonds, can provide stability and preserve capital. These assets are less volatile and offer predictable returns, making them suitable for conservative investors or those nearing retirement. Find out more about low-risk investments.
- Emergency fund: Maintaining an emergency fund to cover unexpected expenses reduces the need to liquidate investments at an inopportune time. This fund should be easily accessible and typically cover three to six months of living expenses. Having an emergency fund ensures that you won’t have to sell investments during a market downturn to cover immediate needs.
- Managing risk in retirement planning: For those nearing retirement, managing investment risk becomes even more critical. Shifting to more conservative investments and focusing on preserving capital while still achieving growth is essential. Learn how to manage risk in retirement planning.
- Risk-adjusted return: Evaluating investments based on their risk-adjusted return helps you understand the returns relative to the risks taken. This approach allows you to compare different investments more effectively and choose those that offer the best returns for the level of risk you’re comfortable with.
Understanding and managing investment risks is crucial “for achieving your long-term financial goals.”
By recognizing the different types of risks, “assessing your risk tolerance, and implementing effective risk management strategies, you can build a resilient and diversified portfolio.”
Mintos concluded that “investing is not just about maximizing returns but also about safeguarding your investments against potential losses.”
Stay informed, regularly review your portfolio, and “adjust your strategies as needed to navigate the ever-changing investment landscape.”