Much of the conversation over the past month has been dominated by headlines coming out of China, and the news has not been positive. The huge amounts of debt used to fuel business expansion is catching up with many, including one of the country’s largest property developers, China Evergrande Group. As of the end of last year, the property developer had more than 700 projects under construction, covering 132 million square meters of total floor area. The huge pipeline is supported by huge amounts of debt, and $7.4B is due to mature and be repaid next year but the company has already started to miss interest payments sending markets into a panic as the situation is reminiscent of 2008/2009.
While most think that the banking system’s exposure to the developer is manageable and that a systemic crisis is unlikely, the uncertainty that exists in the market at the moment is driving valuations of Chinese equities down. Developed markets, however, only experienced a moderate decline in September which did erase much of the previous quarters gains but overall they continue to sit on strong gains for the year to date.
In September the Fed announced it planned to slow the pace of asset purchases and it also released its projections surrounding interest rates. It is expected that rates will increase to 1.75% by the end of 2024 and markets were caught a little off guard by this news, with treasury yields increasing in the days following the Fed’s September meeting. The hawkish shift from the Fed in conjunction with hopes that we may be at a point where most people have either been vaccinated or already infected with Covid, also caused government bonds to sell off, after their rally earlier in the quarter.
The last week of September was also a pivotal week for congressional Democrats. The party needed to keep the government funded, stave off a default, push a $1 trillion infrastructure bill to President Biden and secure the votes for a defining climate change and social policy bill. Not an easy task to say the least.
Switching to fixed income, high yield bond prices have remained flat in Q3 as momentum from fundamental credit improvement and strong corporate earnings has been offset by lingering virus concerns. Food & beverage and food & drug retail outperformed with energy remaining the best performing industry so far in 2021. Expectations are that spreads could tighten by up to an additional 40 bps by mid-2022 before some moderate widening thereafter. This view does depend on how the Fed decides to tackle rising inflation, the level of uncertainty in China and the risk of a new Covid mutation.
Asset class commentary
Commercial real estate
Amid an improving economy, the demand for commercial real estate continues to recover, but the recovery is uneven across property types and geographic markets. In line with our commentary from previous months, the demand for commercial real estate continues to recover but unevenness does exist across property types and geographic markets.
According to the National Association of Realtors, Q3 saw absorption in the multifamily market reach a decade high level, with asking rents up nearly 11% year-over-year. In the industrial market, asking rents are up nearly 7%. In the retail market, rents are up by 2% year-overyear.
The unevenness in the recovery becomes apparent when you analyse the declining occupancy rates within the office market. More than 144 million square feet of office space has been given up by tenants across the United States since the start of the COVID-19 pandemic. It is expected that office vacancy rates will likely remain above 10% in the next two years.
Sign up with your email address
Securely verify your identity and link a bank account
Verify your accreditation (if applicable) to access all of Yieldstreet’s offerings.
Our weekly podcast providing ideas about how to make money work for you and bring you closer to your dreams.
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.
2 Represents a net estimated, unrealized annualized internal rate of return (IRR) of your portfolio and is based by reference to the effective distribution dates and amounts to and from the investments, as well as any outstanding principal and accrued and unpaid interest as of the current date, after deduction of management fees and all other expenses charged to the investments.[read more]
3 "Annual interest" or "Annualized Return" represents an annual target rate of interest or annualized target return and "term" represents the estimated term of the investment. Such target interest or target returns and estimated term are projections of the interest or returns and or term and may ultimately not be achieved. Actual interest or returns and term may be materially different from such projections. This targeted interest or returns and estimated term are based on the underlying investments held by the applicable.
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 The Fund will cease investing and seek to liquidate the Fund's remaining portfolio no later than 48 months after the Fund's initial closing. It may take up to twelve months thereafter to fully monetize any remaining illiquid investments in the Fund's portfolio.
6 Represents the sum of the interest accrued in the statement period plus the interest paid in the statement period.
7 The internal rate of return ("IRR") represents an average net realized IRR with respect to all matured investments 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 Sept 6th, 2021, after deduction of management fees and all other expenses charged to investments.
8 Investors should carefully consider the investment objectives, risks, charges and expenses of the Yieldstreet Prism Fund before investing. The prospectus for the Yieldstreet Prism Fund contains this and other information about the Fund and can be obtained by emailing [email protected] or by referring to www.yieldstreetprismfund.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.
No communication by YieldStreet Inc. or any of its affiliates (collectively, “Yieldstreet™”), through this website or any other medium, should be construed or is intended to be a recommendation to purchase, sell or hold any security or otherwise to be investment, tax, financial, accounting, legal, regulatory or compliance advice. Nothing on this website is intended as an offer to extend credit, an offer to purchase or sell securities or a solicitation of any securities transaction.
Any financial projections or returns shown on the website are estimated predictions of performance only, are hypothetical, are not based on actual investment results and are not guarantees of future results. Estimated projections do not represent or guarantee the actual results of any transaction, and no representation is made that any transaction will, or is likely to, achieve results or profits similar to those shown. In addition, other financial metrics and calculations shown on the website (including amounts of principal and interest repaid) have not been independently verified or audited and may differ from the actual financial metrics and calculations for any investment, which are contained in the investors’ portfolios. Any investment information contained herein has been secured from sources that Yieldstreet believes are reliable, but we make no representations or warranties as to the accuracy of such information and accept no liability therefor.
Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by Yieldstreet or any other party, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.
Investments in private placements are speculative and involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Additionally, investors may receive illiquid and/or restricted securities that may be subject to holding period requirements and/or liquidity concerns. Investments in private placements are highly illiquid and those investors who cannot hold an investment for the long term (at least 5-7 years) should not invest.
Alternative investments should only be part of your overall investment portfolio. Further, the alternative investment portion of your portfolio should include a balanced portfolio of different alternative investments.
Articles or information from third-party media outside of this domain may discuss Yieldstreet or relate to information contained herein, but Yieldstreet does not approve and is not responsible for such content. Hyperlinks to third-party sites, or reproduction of third-party articles, do not constitute an approval or endorsement by Yieldstreet of the linked or reproduced content.
Investing in securities (the "Securities") listed on Yieldstreet™ pose risks, including but not limited to credit risk, interest rate risk, and the risk of losing some or all of the money you invest. Before investing you should: (1) conduct your own investigation and analysis; (2) carefully consider the investment and all related charges, expenses, uncertainties and risks, including all uncertainties and risks described in offering materials; and (3) consult with your own investment, tax, financial and legal advisors. Such Securities are only suitable for accredited investors who understand and willing and able to accept the high risks associated with private investments.
Investing in private placements requires long-term commitments, the ability to afford to lose the entire investment, and low liquidity needs. This website provides preliminary and general information about the Securities and is intended for initial reference purposes only. It does not summarize or compile all the applicable information. This website does not constitute an offer to sell or buy any securities. No offer or sale of any Securities will occur without the delivery of confidential offering materials and related documents. This information contained herein is qualified by and subject to more detailed information in the applicable offering materials. Yieldstreet™ is not registered as a broker-dealer. Yieldstreet™ does not make any representation or warranty to any prospective investor regarding the legality of an investment in any Yieldstreet Securities.
Banking services are provided by Evolve Bank & Trust, Member FDIC.
Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.
Our site uses a third party service to match browser cookies to your mailing address. We then use another company to send special offers through the mail on our behalf. Our company never receives or stores any of this information and our third parties do not provide or sell this information to any other company or service.