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Understand Max Issuer Exposure
Understand Max Issuer Exposure

This function in your Auto Investment Bot helps to limit your exposure in a single Issuer and diversify risk!

Melissa avatar
Written by Melissa
Updated over a week ago

Do you know one of the ways to diversify your investment risk is to set up the Max Issuer Exposure feature?

This feature allows you to limit the amount of exposure that the Auto Invest Bot allocates into a single Issuer which will be based on a percentage of your outstanding principal. This feature will only be enabled when your total outstanding principal is more than RM 1,000.

Example:

You have invested into three different Issuers as follow:

Issuer A: RM 8,000 (into 3 Notes)

Issuer B: RM 12,000 (into 2 Notes)

Issuer C: RM 5,000 (into 5 Notes)

Total Outstanding Principal: RM 25,000

To calculate your Max Issuer Exposure = Total Investment Amount in a single Issuer / Total outstanding Principal

  • Your Issuer Exposure in Issuer A = 8,000 / 25,000 = 32%

  • Your Issuer Exposure in Issuer B = 12,000 / 25,000 = 48%

  • Your NEW maximum possible Issuer Exposure in Issuer C = 5,000 / 25,000 = 20%

    *Investments in Issuer A & B are of higher risk due to larger exposure.

Scenario 1: Max Issuer Exposure is set at 20%

  • The Auto Invest bot will not invest any further in Issuer A & Issuer B

  • While the Auto Invest bot will be investing in Issuer C

Scenario 2: Max Issuer Exposure is set at 20% and if your outstanding exposure in Issuer C is RM 4,500

  • The maximum amount that the Auto Invest bot will allocate is RM 500

The Max Issuer Exposure feature will be enabled only if Auto Invest Bot is activated.

Understanding how the feature works is important, this is to ensure that you have set the correct percentage. At the same time, it will help to mitigate risk of your investment to be overexposed into a single Issuer. It is also important to check your portfolio numbers and Auto Bot settings from time to time as it correlates.

Example 2:

  • Your current outstanding Principal is RM 1,000.

  • Your Max Issuer Exposure setting is 5%.

  • Your Auto Invest Bot minimum amount is set to RM100.

With the above scenario, the Auto Invest Bot will not allocate your funds to any of the investments. This is because your max exposure per Issuer is RM 50 while the minimum amount to invest is RM 100.

Do check your Max Issuer Exposure settings now, to make sure that you have set it up accurately!

Please invest with the knowledge that there may be a chance for default and a possibility of losing all your investments despite limiting your borrower exposure.

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