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Yieldstreet is an investment platform that offers high-yield alternative investment opportunities to individual investors. These investments include everything from real estate, commercial and consumer financing, litigation financing, art, and more.
It’s the huge diversity of offerings that make Yieldstreet unique compared to other alternative investment platforms (such as ones that just focus on real estate or art).
Is it the right place for you to buy alternatives or should you look elsewhere? We dig into the pros and cons, and look at the numbers surrounding Yieldstreet and it’s offerings.
The most important aspects to consider before signing up for Yieldstreet’s services are listed below.
Yieldstreet offers a wide range of assets to choose from, including:
- Real estate: The real estate offerings on the platform include investments in single-family and multifamily homes and commercial and industrial real estate developments.
- Art: Yieldstreet’s art offerings allow investors to own shares of high-value art pieces. However, most minimum investments in art funds are $10,000 or more.
- Short-term notes: Short-term note offerings have a targeted annualized yield of 4%.
- Structured notes: Yieldstreet’s structured note categories include tech, consumer and diversified portfolios. Minimum investments in these portfolios are $15,000 or more.
- Supply chain: Investors can tap into supply chain portfolios. However, minimum investments are $10,000 or more.
Yieldstreet also offers Prism Fund, which includes assets from each fund category mentioned above. Investor accreditation is not required to tap into the multi-asset portfolio, and the minimum investment is just $500.
Show Me The Numbers
When it comes to investments, the most important thing to look at are the numbers. These are Yieldstreet’s most important numbers.
- Average Fees: 2% per year on average, with a few other small fees. These are industry average fees for private equity, but are much higher than the fees you would see on ETFs or Mutual funds.
- Minimum Investment: $2,500 per offering
- Expected Returns: The projected yields range from 8%-20% but the actual performance may vary.
- Length of Investment (Lock-Up Period): Ranges from 6 months to 5 years
- Size of Platform: $1 Billion Invested
- Minimum Income To Invest: You must be an accredited investor to invest in Yieldstreet’s deals. That means you must have earned $200,000 individual income or $300,000 joint income (with a spouse) in the last two years. Alternatively, you can have $1 million net worth outside of your primary residence.
What Is Interesting About Yieldstreet
In my opinion, it can be hard for any investor to untangle the marketing hype on a platform from the actual value of the investments offered. And to a certain extent, I think Yieldstreet leans heavily on the hype of alternative investments. That said, Yieldstreet does appear to offer two compelling value propositions.
Potential Returns: The most obvious value proposition is the potential for great returns. Yieldstreet targets returns ranging from 8% to 20%, and it rejects over 90% of deals presented to the platform. While no company can guarantee performance, it seems like Yieldstreet’s offering could yield very solid returns.
Low Correlation: The other thing that I found interesting about Yieldstreet was the lack of correlation with the stock market. High correlation means that an investment moves up and down in price at the same time a stock market index (say the S&P 500) moves up and down. Yieldstreet offers low correlation investments. That means the ups and downs of Yieldstreet have not (to this point) correlated with the ups and downs of the stock market.
Yieldstreet Prism Fund: For non-accredited investors, you can invest in a fund that invests in the alternative assets.
Including low correlation investments in your portfolio can be a smart move. It smooths out the returns in your portfolio, and tends to lead to higher returns overall. Including “alternatives” (anything outside of stocks and bonds) in your portfolio can lead to higher overall returns. With esoteric offerings, Yieldstreet truly qualifies as an alternative.
- Wide variety of alternative asset classes
- Flagship fund is available for non-accredited investors and has a $2,500
- Short and long-term investments available
- Create goal-based portfolios for goals like income or growth
- There is only one choice outside the qualifications of the investor
- Many require an investment of $15,000 or more
- There is no secondary market to boost liquidity
In general, we’re concerned about what Yieldstreet is doing. Democratizing alternatives investing (even among accredited investors) is valuable for investors and for the market, but there doesn’t seem to be enough information about Yieldstreet’s investments and success to make a good judgement.
That said, the lack of control, the limited offerings, and the esoteric nature of Yieldstreet’s investments makes me nervous. For the right accredited investor, Yieldstreet’s offerings could make sense for a portion of their portfolio. I would advise any investor to limit their exposure to any single deal and to slowly invest into a variety of offerings on the site, if you risk it.