For the past year, soaring inflation, tighter monetary policy, and unprecedented geopolitical risk triggered an increase in volatility in the equity and fixed income markets. Meanwhile, rapidly increasing rates are also causing a slowdown in economic growth, and may eventually spur a recession.
Amid a challenging environment for public markets, alternative assets can be a potentially attractive opportunity for investors to increase their portfolio diversification and potentially enhance returns.
Structured Notes are an opportunity for investors to potentially earn more stable returns while equity markets struggle to find a direction.
Structured Notes are a hybrid vehicle with returns tied to an underlying asset’s performance. They can be pegged to single stock performance, index performance, commodity, or to an underlying asset. The return is contingent on the stock price staying above the strike price, and can target a fixed yield (income notes) or upside (growth notes).
Current market conditions can be challenging, but they can also offer a conducive environment for Structured Notes. The S&P 500 is down 24% year-to-date as of October 13, so strike prices are currently low for new Structured Notes. Amid elevated volatility, Yieldstreet is able to negotiate higher protection thresholds compared to nine months ago. We have already increased the minimum barriers to 30% for all Structured Notes, and our goal is to continue to increase them.
Although predicting which stocks are going to be “downturn-proof” is a fool’s errand, we are keeping tabs on specific sectors and companies that we believe will remain resilient despite the economic uncertainty, namely:
We started offering Structured Notes on our platform in April 2021. Since then, we have provided maturities ranging from 9 months to 24 months, with both income and growth strategies, in different sectors and across different themes — “diversified,” ESG, and financials, to name a few.
Going forward, against the current market backdrop, our goal is to select opportunities that can allow our investors to weather different market conditions.
Yieldstreet provides access to alternative investments previously reserved only for institutions and the ultra-wealthy. Our mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025. We are committed to making financial products more inclusive by creating a modern investment portfolio.