97% of our goals. How’s that for results?

June 15, 20224 min read
97% of our goals. How’s that for results?
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Key takeaways

  • Since inception, Yieldstreet has returned 9.71% on matured offerings, just shy of its stated overall target IRR of 10%. 
  • The target return is not a coupon, nor is it a promise – it is an objective of the investment strategy, and we believe achieving 97% of it is a remarkable result. 
  • Yieldstreet’s results speak of its commitment to putting investors first by setting realistic return targets consistent with risk, and delivering on them.

Target returns and real achievements

While target returns are set as an objective by the investment manager, they are often erroneously interpreted by investors as being yields or coupons – that is not the case. For more information about internal rate of return and target returns, here’s a thorough piece we wrote last month. 

In the alternative investment space, it is customary for professionals to declare the target return for a specific fund, or investment opportunity. That number is not a projection, nor an expectation, rather an attempt to set a realistic goal and give investors a ballpark estimate of where returns can fall. 

It is not uncommon to see target returns missed entirely, or for funds to have double-digit target returns and deliver negative IRR. 


Yieldstreet’s investment team is committed to propose realistic return targets for our investments, rather than showcase eye-popping numbers and then undershoot them. As evidence of that, in our seven year-history as an investment platform, our matured investments generated a 9.71% IRR, just shy of the 10% target return. 

While of course this does not accurately reflect the investment experience of all of our customers – some investments ended up returning below target, some others beat it – it is a testament to the hard work of our originations teams in selecting investment opportunities that performed in line with expectations. 

Breaking it down by asset class

While some asset classes performed better than others, more than 90% of our investments performed within 50 basis points of the target returns, which is a remarkable outcome by most reasonable standards. 

As of May 31, the total amount of matured real estate offerings was $350 million across 68 offerings. These opportunities had a comprehensive IRR of 9.1%, 50 basis points higher than the original target IRR. Yieldstreet’s matured real estate deals spanned different areas of the US – from the East coast, to the Sun Belt, to the Midwest, to the Rockies – further evidence of the wide geographic diversity of the potential opportunities offered to its investors. 

Invest in Alternative Assets

Diversify your portfolio with private market investment offerings.

On private credit, Yieldstreet deployed $386 million in capital across 37 offerings, of which 19 were in the field of supply-chain finance (SCF), a widely successful program where the company deployed close to $270 million. Private credit opportunities achieved an average return of 8.4%, 1.7% lower than the target. However, SCF beat target returns by 30 basis points. 

Legal finance performed well above expectations, with a 12.2% IRR against a target return of 11.2%. We are quite proud of the result as it was obtained from a number of different investment opportunities, across different legal cases. 

Art, transportation financing and short term notes (STN)2. And while matured STN returns may appear relatively low by today’s standards, given the inflation levels and rising risk-free rates, they were not immaterial when they were launched – at a time of record low rates – given the limited lock-up period and potential large downside protection. 

Conclusion

Finance isn’t a precise science, and investment returns are not guaranteed. Depending on an investor’s risk tolerance, there can be potential for higher or lower returns, but there is no certainty of outcomes. In these markets, especially, there can be plenty of potential downside risk. 

This is why it is notable that in its history as an investment platform, Yieldstreet’s effective returns net of fees almost matched target returns. It is a testament to our thorough investment process, which can potentially reduce idiosyncratic risk, as well as to our reluctance to overpromise and underdeliver. While we could advertise outsized returns, and deliver successfully on a fraction of them, we continue to prefer being honest about what our deals can achieve, and avoid fooling investors. 

Private market investing should be built on trust, credibility – and returns. Against these numbers, it is hard to argue that Yieldstreet is not pushing for all three.

1 As of May 31, 2022
2 STNs are excluded from our calculation for the platform’s IRR as they are issued by Yieldstreet to fund its investments. With short-term notes included in the calculation, total IRR for matured products is 8.9%, 20 basis points lower or 98% of the target (9.1%),

We believe our 10 alternative asset classes, track record across 470+ investments, third party reviews, and history of innovation makes Yieldstreet “The leading platform for private market investing,” as compared to other private market investment platforms.

1 Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in significant losses.

3 "Annual interest," "Annualized Return" or "Target Returns" represents a projected annual target rate of interest or annualized target return, and not returns or interest actually obtained by fund investors. “Term" represents the estimated term of the investment; the term of the fund is generally at the discretion of the fund’s manager, and may exceed the estimated term by a significant amount of time. Unless otherwise specified on the fund's offering page, target interest or returns are based on an analysis performed by Yieldstreet of the potential inflows and outflows related to the transactions in which the strategy or fund has engaged and/or is anticipated to engage in over the estimated term of the fund. There is no guarantee that targeted interest or returns will be realized or achieved or that an investment will be successful. Actual performance may deviate from these expectations materially, including due to market or economic factors, portfolio management decisions, modelling error, or other reasons.

4 Reflects the annualized distribution rate that is calculated by taking the most recent quarterly distribution approved by the Fund's Board of Directors and dividing it by prior quarter-end NAV and annualizing it. The Fund’s distribution may exceed its earnings. Therefore, a portion of the Fund’s distribution may be a return of the money you originally invested and represent a return of capital to you for tax purposes.

5 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.

6 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments, excluding our Short Term Notes program, weighted by the investment size of each individual investment, made by private investment vehicles managed by YieldStreet Management, LLC from July 1, 2015 through and including July 18th, 2022, after deduction of management fees and all other expenses charged to investments.

7 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Alternative Income Fund before investing. The prospectus for the Yieldstreet Alternative Income Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetalternativeincomefund.com. The prospectus should be read carefully before investing in the Fund. Investments in the Fund are not bank deposits (and thus not insured by the FDIC or by any other federal governmental agency) and are not guaranteed by Yieldstreet or any other party.

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9 Statistics as of the most recent month end.

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