Managing Expectations of Investment Performance

October 11, 20194 min read
Managing Expectations of Investment Performance
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As your investment is progressing, there are a few important things to keep in mind. While Yieldstreet offers investments that ideally will perform in-line with expectations, it is important to note that not all investments will perform as anticipated. Yieldstreet expects that some loans will indeed experience defaults, and the risk of default is generally greater with loans that target higher-yield returns from borrowers who may not be able to obtain more traditional bank financing. In alternative lending, it is therefore particularly important for lenders to protect against potential default scenarios in order to mitigate risk where possible and maximize potential recoverability where necessary. We work to do exactly that, so that when defaults do occur, our investors can trust in our ability to act swiftly and in their best interest to minimize losses — and, where possible, return principal.

Past investment performance, as we all know, is no indicator of future performance. That is as true with a lender’s past performance managing defaulted loans as it is reporting returns from loans that are repaid according to expectations. Since inception in April of 2015, Yieldstreet has funded over $1 billion across 170+ investment offerings.

Risk Management

Like any investment, offerings on Yieldstreet carry risk, which should be evaluated on a case-by-case basis. Prospective investors are expected to read the stated risk factors for each offering. While we seek to minimize risk by evaluating opportunities before proceeding to an offering – often in consultation with outside partners and advisers, and from there by requiring the collateral by which our investments are backed — all investments carry a certain level of risk.   Those risks are set forth in detail in the offering documents and we urge investors to take them to heart.

As of the close of Q1, we are aggressively addressing 14* defaulted offerings (involving 10 borrowers). Each situation varies in complexity and timing. However, in all instances, we are working tirelessly to help us achieve a favorable outcome.

Read up on how to be an informed investor on Yieldstreet, and find answers to any questions about diversification, risks, and other considerations by visiting our FAQ.


Working with Borrowers

In the first instance, we look for opportunities to work with borrowers who cannot meet their obligations in accordance with the stated loan terms.  We seek to understand the circumstances they are facing, and to negotiate accommodations that may increase their ability to repay the loan. Extended payment terms sometimes make the difference.  The target maturity date listed on Yieldstreet offering documents is inclusive of any extensions of the loan term that may be available. It is thus our expectation that the investment will mature within the target duration, but it is also possible that the Borrower may pay back a loan sooner or much later than the stated maturity.

Communication on Active Investments

Should a formal default occur, Yieldstreet, as the Manager of each investment, remains committed to acting in the investors’ best interest in all instances and will work diligently where appropriate with our asset managers, advisers and industry contacts, toward a resolution. Depending on the particular situation, the workout, restructuring, forbearance and/or legal proceedings, can take time – this is often a sequential process, and can be a protracted one. It’s important to note there may be months of limited information to share with investors until there is a clear path forward with the intention of maximum principal recovery.

However long the process takes, Yieldstreet will actively pursue our rights on behalf of investors. Depending on the circumstances, we may find it best to work with the Borrower toward a resolution. Or, after assessing the situation with our origination partner, we may find it to be most prudent to take a more aggressive approach. You can refer to our default loan process for a detailed look at how we assess default scenarios. Regardless of the work-out strategy, our investors can rely on us to act in their best interest at all times and to provide updates along the way. Updates may vary in substance as it may take time for the situation to unfold and for us to gain clarity.

Investors can expect an update for each investment they have participated in on a quarterly basis. To manage expectations, updates typically go out within 60 days after quarter-end.

Starting on April 30, 2020, we will send monthly updates to all investors in defaulted offerings. If we do not have any meaningful update from the prior month – which may often be the case – we will say so and provide our best current estimate when we expect to learn more.

Please reach out to [email protected] with any questions.

This communication and the information contained in this article are provided for general informational purposes only and should neither be construed nor 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. Any link to a third-party website (or article contained therein) is not an endorsement, authorization or representation of our affiliation with that third party (or article). We do not exercise control over third-party websites, and we are not responsible or liable for the accuracy, legality, appropriateness or any other aspect of such website (or article contained therein).

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 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.

8 This tool is for informational purposes only. You should not construe any information provided here as investment advice or a recommendation, endorsement or solicitation to buy any securities offered on Yieldstreet. Yieldstreet is not a fiduciary by virtue of any person's use of or access to this tool. The information provided here is of a general nature and does not address the circumstances of any particular individual or entity. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of this information before making any decisions based on such information.

9 Statistics as of the most recent month end.

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