The Importance of Owning Non-Correlated Assets

May 18, 20183 min read
The Importance of Owning Non-Correlated Assets
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The effects of the 2008 Recession resonated far beyond those working on Wall Street. For many in the US and around the globe, it marked the first time they heard terms such as credit default swaps. It was also the first time that many felt the recessionary effects of the stock market firsthand: in the loss of their homes, their retirement savings or their confidence in the future.      The recession was unique in its scope – the precipitousness of the freefall – but not in its fundamental characteristics: the stock market is typically volatile, risky, and enmeshed in broader systemic forces that are both hard to predict and often impossible to mitigate. Due to limited investing options available, for decades this fundamental uncertainty and volatility was part of the deal for investors: if they wanted to invest, they would have to deal with the systemic risks and unpredictability of the stock market. It was simply part of the agreement. Of course, stocks should continue to be a part of an investors’ portfolio. But as we saw in the Recession, as well as in the day-to-day whiplashing of the market, the volatility can leave many investors weary and over exposed, creating challenges if investors happen to need access to some of their invested capital during a drawdown. It is simply too volatile a basket in which to rest all your eggs. YieldStreet was formed with that goal in mind – a way to build wealth outside of and uncorrelated to the market. YieldStreet creates wealth by connecting investors to asset classes that are backed by collateral, outside of the stock market. We find alternative investments that are highly structured and pay interest on a regular and predictable schedule. Check out examples of some recent offerings:  
  • Asset Class: Litigation
    • Terms: 10.25% target interest per year over 36 months
    • $18.5 million was raised to help a Texas based mass tort law firm refinance its current debt, fund its operational expenses and support growth
  • Asset Class: Commercial
    • Terms: 13% target interest per year over 16 months.
    • $3.04 million raised went towards a portfolio of merchant cash advances across the country
  • Asset Class: Real Estate
    • Terms: 10% annual interest per year over 36 months
    • $6.27 million raised to fund a portfolio of 10 real estate bridge loans
Each of these investments is designed to provide predictability – a target interest rate, regular and scheduled payments and asset backed collateral that protects downside. These types of low-correlated investments allow investors to judge offerings along clearly-defined and tangible metrics. And because of this clarity, both highly experienced investors and newcomers can participate. They can become highly informed in the diligence process – but they can also unplug. YieldStreet believes that having a portion of their portfolios in alternative assets can allow investors to rest easy as they turn away from the day-to-day volatility of the stock market.