Portfolio Yield
Portfolio yield is the realized annualized return on an MCA portfolio after charge-offs and recoveries — the headline performance metric for MCA funder economics and capital provider reporting.
Why This Matters
Portfolio yield calculation: (interest income + fees - charge-offs + recoveries) / average portfolio balance, annualized. Top-tier MCA funders target 25-40% net portfolio yields. Yield compresses with default-rate increases, recovery deterioration, and pricing pressure. Yield expands with underwriting improvements, collection effectiveness, and pricing power. Capital providers (warehouse lenders, securitization investors) evaluate funder yield consistency as primary diligence criterion.
Frequently Asked Questions
Frequently Asked Questions
What's a healthy MCA portfolio yield?
Industry benchmarks: 25-40% net annualized yield for established funders. Sub-20% suggests pricing or credit problems; above 50% may signal under-investment in growth or unsustainable pricing.
How does portfolio yield differ from gross yield?
Gross yield is income before charge-offs (factor rate × volume velocity). Net yield (portfolio yield) subtracts losses and recoveries. Spread between gross and net measures credit performance.