How to be an informed investor on Yieldstreet

March 12, 20206 min read
Share on facebookShare on TwitterShare on Linkedin
reading-on-laptop-informed-investing

At Yieldstreet, we believe that our innovative offerings help our community of investors realize their next level. It is in our company’s DNA to bring products that were typically reserved for institutional investors to individual investors like you. While we thoroughly review every offering on our platform, it is important for you as the investor to have a full understanding of the potential risks so you can make informed decisions when investing on the platform.

Here are a few things that you can do to help ensure that you are fully informed prior to investing: 

1. Familiarize yourself with Yieldstreet’s asset classes and products

Understanding the asset classes we offer is an important aspect of investing on our platform. The structure of offerings will vary among asset classes depending on the type of collateral backing an investment and the varying risks associated with each asset class.  

For example, a Marine Finance investment may be collateralized by the scrap value of a vessel, while an Art Finance investment may be secured by a pool of artwork with an aggregate value higher than the loan amount. That being said, it is also possible for two investments in the same asset class to exist with substantially different terms and conditions.  For this reason, it is incredibly important that investors thoroughly review every offering they participate in on Yieldstreet.  

girl-reading-carefully-understanding-yieldstreet-asset-classes

2. Understand the offering before investing

When submitting an investment request on Yieldstreet, investors are, among other things, acknowledging and agreeing to the terms and conditions outlined in the legal offering documents. The legal documents for an offering on Yieldstreet will vary based on the way the offering is structured. 

Offerings on Yieldstreet can take the form of a purchase of a Borrower Payment Dependent Note (“BPDN”) or a membership interest in a Special Purpose Vehicles (“SPV”). Documents associated with Yieldstreet offerings can be downloaded from the document section on the investment offering page for your review.

Investors must read and understand all of these documents prior to submitting an investment request on Yieldstreet. 

Below is a list of documents you might see for a given Yieldstreet offering: 

  • Series Note Supplement – This is a detailed overview of the offering. It describes the terms of the investment, which includes an explanation of the underlying dynamics of the offering itself, as well as the note that will be held by the investor.  This will be available for offerings in a BPDN structure.
  • Private Placement Memorandum (PPM) – This is a legal document that lays out the general objectives, risks, and terms of the note offerings made by the note issuer. This will be available for offerings in a SPV structure.
  • Indenture and Form of Note – This is an agreement between the note issuer and the trustee specifying the features of the note issuance, such as the trustee’s security interest, servicing of the underlying investment and events of default under the note, among other things. The indenture contains the terms and conditions applicable to the note issuance. The indenture and note govern the relationship between the note issuer and noteholders (meaning the investors). 
  • Operating Agreement – This document sets out the manner in which the SPV will operate, including, in the case of an SPV offering, the rights of the investors and order of payment.
  • Subscription Agreement – This is the agreement pursuant to which the investor subscribes to either a note (BPDN) or membership interest (SPV) and makes certain representations to and agreements with Yieldstreet. For example, accredited investor status and non-circumvention.
girl-playing-jenga-understanding-your-risk-tolerance

3. Know your own risk tolerance 

Familiarizing yourself with your personal risk tolerance as an investor should give you an understanding of how to go about managing expectations of investment performance. This applies not only to your Yieldstreet investments but also extends to your overall portfolio as an investor. 

Your existing investments can give you a good idea of your risk tolerance and any decisions you make about participating in any of Yieldstreet’s offerings should fall in line with your own preferences. Here are some calculators designed to help you develop a stronger understanding of your own profile as an investor. 

It is your responsibility as an investor to determine whether the investments on Yieldstreet are appropriate based on your risk profile, and your financial goals and objectives. 

4. Consider diversification and concentration 

It is important to keep diversification in mind when considering what investments to make on Yieldstreet. Paying attention to your own investment concentration is also crucial to making informed investment decisions. An over-concentration in one asset class can expose you to a greater level of risk in comparison to spreading your capital over numerous asset classes.

Not only is it important to diversify your holdings across asset classes on Yieldstreet, but it is also important to consider how much exposure you have to one originator. The more you can spread your capital across asset classes and originators, the more you may be able to reduce the level of systematic and unsystematic risk you are exposed to. 

girl-checking-her-phone-investment-diversification-and-concentration

5. Bridge the gap between being a retail investor and understanding institutional investment products

Yieldstreet enables individual investors to access offerings that they have likely not been able to gain access to in the past. When trying to compare a Yieldstreet offering to some of the more traditional offerings available to you such as stocks or real estate, it is important to realize that these debt-based investments are not liquid like stocks, nor are they directly managed by the investor like traditional real estate investments.

Yieldstreet investments must be held by the investor until maturity and have a different payment schedule compared to say, dividends from stocks. For example, if a Yieldstreet real estate offering is expected to pay on a monthly basis, investors should not necessarily expect to receive payments on the same day each month. 

Yieldstreet offerings are also not like other illiquid alternative investments. In contrast to a real estate investment property, where the investor has full control and oversight of their property directly, there can be multiple stakeholders as well as additional moving parts involved in a Yieldstreet offering. This impacts Yieldstreet’s resolution strategy in the event of a default. It’s important to note that investors may receive limited information while a work-out strategy is being determined and executed. 

This added element of complexity requires individual investors, like yourself, to be knowledgeable and comfortable with how each offering is structured and have an understanding of any associated risks.  For this reason, you may come across concepts or terms when reviewing offering documents that are unfamiliar to you. It is essential that you understand these documents in their entirety before making the decision to invest, so we encourage you to reach out to us at [email protected] with any questions or concerns. 

6. Use our Resources and ask questions if you don’t understand something

If you come across any aspect of an offering that you do not understand or would like more information about, look up the topic in our Resource Center. Additionally, we are always available to answer any questions if you reach out to us at [email protected]

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 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.

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.

300 Park Avenue 15th Floor, New York, NY 10022

844-943-5378

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, except for specific investment advice that may be provided by YieldStreet Management, LLC pursuant to a written advisory agreement between such entity and the recipient. 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 therefore.

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 are 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.

YieldStreet Inc. is the direct owner of Yieldstreet Management, LLC, which is an SEC-registered investment adviser that manages the Yieldstreet funds and provides investment advice to the Yieldstreet funds, and in certain cases, to retail investors. RealCadre LLC is also indirectly owned by Yieldstreet Inc. RealCadre LLC is a broker-dealer registered with the Securities and Exchange Commission (“SEC”) and a member of the Financial Industry Regulatory Authority (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Information on all FINRA registered broker-dealers can be found on FINRA’s BrokerCheck. Despite its affiliation with Yieldstreet Management, LLC, RealCadre LLC has no role in the investment advisory services received by YieldStreet clients or the management or distribution of the Yieldstreet funds or other securities offered on our through Yieldstreet and its personnel. RealCadre LLC does not solicit, sell, recommend, or place interests in the Yieldstreet funds.

Yieldstreet is not a bank. Certain services are offered through Plaid, Orum.io and Footprint and none of such entities is affiliated with Yieldstreet. By using the services offered by any of these entities you acknowledge and accept their respective disclosures and agreements, as applicable.

Investment advisory services are only provided to clients of YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission, pursuant to a written advisory agreement.

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.

Read full disclosure