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What is a seasoned return and how do you calculate it?

Seasoned returns are Annualized Return for notes aged 10 months or more. To calculate Annualized Returns, a total gain or loss is calculated by summing all payments received net of principal repayment, credit losses, and servicing costs. The gain or loss is then divided by the average daily amount of principal outstanding to get a simple rate of return. This rate is annualized by dividing by the dollar weighted average Note age of your portfolio in days and multiplying by 365. Investor Promotion Returns include any investor promotional payments you may have received from Prosper funding LLC or Prosper Marketplace, Inc. since July 15, 2009 and are divided by your Total Dollars Invested for the Purchase Period to get a simple rate of return. This rate is annualized using our estimate of a Note’s weighted average life, currently 15.9 months. Total Returns are the sum of Annualized Returns and Investor Promotion Returns. All calculations exclude Notes bought or sold on the Folio Investing Note Trader platform. The Annualized Return calculations include Notes issued and sold by Prosper Funding LLC and Prosper Marketplace, Inc. since July 15, 2009 and are valid through March 01, 2016. These calculations are likely to change in the future.

Prosper provides investors with the following two return values:

  1. Seasoned Returns: Annualized Return for notes aged 10 months or more.
  2. All Notes: This Annualized Return is for a set of Notes with an Average Note Age of less than 40 days. Please note that returns can vary early in the life of a Note and that this calculation may not yet be meaningful for your portfolio.

 

The Annualized Return is calculated using the following equation:

Sum ([Payments - ChargeOffs]) / [AvgDailyBal / AvgNoteAge * 365]

Where AvgDailyBal = Sum (PrincipalBalance * DaysAtThatBalance) / Sum (DaysAtThatBalance)

 

The dollar weighted average Note age equation is as follows:

SUM (age * original Note value) / SUM (original Note value)

 

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