As the Yieldstreet Prism Fund is a novel investment product on our platform, many of our investors may wonder about the Fund’s investment strategy. Here, we take a look at the Fund’s objectives, management, lifecycle, and the types of investments that will be included.
The primary objective of the Yieldstreet Prism Fund is the generation of income through investment in loans, bonds, and other debt instruments. The Fund also aims to maximize the total return over the life of the Fund while simultaneously preserving capital within the Fund and managing the volatility of the assets over time.
Yieldstreet, as the manager of the Fund, will bring a distinctive investment management strategy, as outlined below:
The Yieldstreet Prism Fund has certain constraints during different stages of the Fund’s lifecycle. Here are the phases the Fund will go through throughout its life:
During the ramp phase, certain Fund constraints have heavier weight and limitations on YM’s ability to deploy capital. In addition to this, the current situation created by the coronavirus pandemic has generated uncertainty, and we’re reviewing each investment opportunity judiciously.
Despite the distributions and liquidity events, the Fund’s goal is to generate long-term value for its shareholders. We believe the current environment requires a heightened level of patience to fully capture the potential opportunities created by the moment.
In the meantime, tradable securities may be used as part of the portfolio mix to minimize cash drag and provide portfolio diversification1 while YM prudently selects and invests in appropriate private credit investments that YM believes have the potential to help meet the Fund’s objectives. During the ramp phase, however, the Fund may invest in tradable securities that could comprise up to 50% or more of the Fund. The purpose of investing in tradable assets would be to reduce cash drag as we source more private credit investments in which the Fund can invest. Post ramp phase, this percentage is expected to drop to 10-20% but may be more for tax or regulatory reasons or while YM is selecting appropriate investments.
When deciding what tradable securities should be included in the Fund, YM considers the following:
YM has identified tradable securities currently yielding more than money market funds while meeting these considerations and also satisfying our short-term investment horizon for these types of securities. Two examples of the types of tradable securities that may be included in the Fund are bank preferred stocks and mortgage bonds. While there may be higher-yielding securities, they generally require an investment horizon longer than we intend for the liquid assets held by the Fund.
The ramp phase will progressively end when the Fund reaches a certain size and when holding a diversified portfolio of illiquid investments is possible1.
During the investment phase, we expect that illiquid investments will comprise the majority of the Fund’s allocation, approximately 85% to 90% of the Fund’s assets. The remainder will be in liquid, tradable securities, or cash intended to cover the Fund’s liquidity needs for shareholder distributions and upcoming illiquid investments.
Some of the investments may amortize or mature, leading to new investments being made in the Fund.
End of Life Phase
During the end of the Fund’s life, as illiquid investments amortize and tradable securities are sold, principal will be returned to investors.
The illiquid investment space is likely to top $1 trillion this year according to one estimate. Alternative investments present a potential growth opportunity for advisers. While the illiquid investment space is huge, Yieldstreet has focused primarily on finding opportunities in asset classes such as litigation financing, commercial and residential real estate, marine financing, and art financing, as well as opportunities in a range of commercial and consumer spaces.
There are several reasons why the Yieldstreet Prism Fund’s strategy might work well for investors:
To familiarize yourself with the details of the Yieldstreet Prism Fund, it is important that you review the prospectus, available for download on this page. You can also visit our FAQs for more information on the Fund.
If you would like to learn more about the Yieldstreet Prism Fund, please see the following resources:
If you have additional questions regarding the Yieldstreet Prism Fund, please reach out to us at [email protected].
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.
The securities described in the prospectus are not offered for sale in the states of Nebraska or North Dakota, or to persons resident or located in such states at this time. No subscription for the sale of shares will be accepted from any person resident or located in Nebraska or North Dakota at this time.
1The YieldStreet Prism Fund is a non-diversified closed-end fund for purposes of the Investment Company Act of 1940, as amended (“40 Act”), and is therefore not a 40 Act “diversified” product.
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).
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" represents an annual target rate of interest and "term" represents the estimated term of the investment. Such target returns and estimated term are projections of the returns or term and may ultimately not be achieved. Actual returns and term may be materially different from such projections. These targeted returns and estimated term are based on the underlying agreement between the SPV and borrower or originator, as applicable.
4 Reflects the initial quarterly distribution declared by the board of directors on February 6, 2020, which will be payable to stockholders of record as of June 10, 2020, and the initial offering price of $10 per share.
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.
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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.
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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.
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Investment advisory services are provided by YieldStreet Management, LLC, an investment advisor registered with the Securities and Exchange Commission.