Yieldstreet Review: Expanding Access to Alternative Investments
Yieldstreet is an alternative investment platform for accredited and non-accredited investors.
Yieldstreet offers investors a simple way to invest in alternative investments.Rating: 4.3 out of 5 stars
Yieldstreet is an alternative investment platform that crowdfunds loans backed by various assets. The alternative investment products include real estate, legal settlements, shipping vessels, financial instruments, and art. Since its inception, investors have invested over $2.0 billion into alternative investments through Yieldstreet.
Alternative investments can bring diversity to any investor’s portfolio. Yieldstreet provides an opportunity for accredited and non-accredited investors to jump into alternative investments.
Let’s take a closer look at the opportunities in this Yieldstreet review.
What Is Yieldstreet?
Yieldstreet is an alternative investment platform that crowdfunds loans backed by various assets. The alternative investment products include real estate, legal settlements, shipping vessels, financial instruments, and art.
Yieldstreet says its goal is to expand access to alternative investment opportunities. The platform is looking for unique ways to build wealth and places a strong emphasis on income generation for its users.
Based on intensive capital needs and the specific expertise required, many individual investors would be unable to confidently invest in many of the alternatives available through Yieldstreet. In fact, alternative investments are typically only available to the top 1%. Yieldstreet wants to open the door to more investors interested in alternative investments.
Since its inception, investors have invested over $2.0 billion into alternative investments through Yieldstreet. Along the way, the net IRR has been 10.65%.
How Does Yieldstreet Work?
Yieldstreet has different offerings for different investors.
Regardless of the investment option you choose, you’ll need to set up an account first. The process will take a few minutes. Within the account setup process, you will indicate whether you are an accredited investor.
Here’s a look at the four ways you can invest in Yieldstreet.
1. Multi-Asset Class Fund
Non-accredited investors can invest in Yieldstreet’s Prism Fund, a multi-asset class fund. The assets within the fund include real estate, legal finance, marine, cash, and art.
The fund has a goal of providing quarterly distributions to its investors. When you make an investment, the cash distributions will be automatically reinvested through a DRIP program unless you opt out.
Although the majority of investors in the U.S. can invest in the Prism fund, residents of North Dakota and Nebraska are excluded.
2. Short-Term Notes
Yieldstreet allows investors to earn interest over the course of a 120-day or 180-day term. The investment in a short-term note is based on the underlying value of an asset. Currently, Yieldstreet advertises the ability to earn up to a targeted annualized yield of 4%.
For example, you might invest in a commercial real estate loan for a property. The borrower would have a short term to repay the loan with interest. Throughout the term, you would be paid interest on a monthly basis. At the end of the term, your principal would be repaid.
But what happens if the borrower defaults? In that case, Yieldstreet would attempt to recover the cash invested in the investment. However, their ability to collect the funds will depend on the situation.
As of December 2021, investors have invested $215 million into short term notes with Yieldstreet, and $150 million in principal and interest has been returned to the investors.
3. Single Asset Class Offerings
Yieldstreet offers investors the ability to invest in a single asset class.
At the moment, one of the available offerings is an Art Equity Fund that owns a portfolio of blue chip art from the Post War and Contemporary eras. Another is a multi-family apartment complex in Boston.
The deals you’ll encounter with Yieldstreet will vary dramatically. Some have relatively short terms of a year or two. Others have a term of five years or longer. In any case, the target annualized return will be indicated along with a significant amount of information for you to consider.
4. Structured Notes
The final way to invest with Yieldstreet is through structured notes. A structured note is a hybrid security that is issued as debt with an outcome tied to the performance of an underlying stock. With this investment, the hope is to receive quarterly coupons while enjoying some downside protection.
Typically, major banks issue these investments with a duration of 24 to 36 months. Yieldstreet offers structured note investment opportunities with a portfolio of several different notes included. Once bought, these investments are entirely illiquid.
Yieldstreet Pros and Cons
With a better understanding of the offerings, let’s continue this Yieldstreet review with a look at the pros and cons.
- Access to alternative assets
- Options available to non-accredited investors
- Short-term opportunities
- Diverse fund options
- Limited options for non-accredited investors
- High risks involved
- Illiquid investments
- Low volume of opportunities
Who Can Invest With Yieldstreet?
The bulk of the platform is only available to accredited investors. You’ll need to have a net worth of at least $1 million. Or earn $200,000 per year or $300,000 as a married couple filing jointly to be considered an accredited investor.
As an accredited investor, you can use Yieldstreet to invest in multi-asset class funds, short-term notes, single asset class offerings, and structured notes.
As a non-accredited investor, you can only invest in the multi-asset class fund.
Yieldstreet Minimum Investment and Fees
Yieldstreet has a range of minimum requirements based on the investment. The fees will also vary based on your investment.
You’ll need to invest at least $500 into the multi-asset class fund. The total annual fees for the fund are 1.5%. Yieldstreet offers limited liquidity by repurchasing a limited number of shares every quarter from existing investors.
The short-term note investment options require a minimum investment of $1,000. Yieldstreet states that this product doesn’t have any fees or expenses involved for the investor.
The single asset class offerings require a minimum investment of $10,000. These investments come with an annualized management fee of 2%.
The structured note investment opportunities require a minimum of $15,000. These investments come with a 1.25% annual management fee. Additionally, a $150 annual fund expense fee will be deducted from your initial coupon payments.
How Do Investors Make Money?
As an investor with Yieldstreet, you can make money in two different schedules.
First, some offerings have a predefined payment schedule. These schedules can come with monthly, bi-weekly, quarterly, or other defined distribution schedules. In most cases, the principal you invested will be repaid at the deal's maturity.
The second option is an event-based payment schedule. In this case, you would make money when something triggers your investment’s fulfillment. For example, let’s say you invested in a legal settlement. When the case is settled, you will receive your payment.
Can You Lose Money With Yieldstreet?
As with all alternative investments, it is absolutely possible to lose money with Yieldstreet. Although Yieldstreet offers a relatively strong track record of success, there is always risk involved.
Beyond the regular risks, some investors have decided to sue Yieldstreet on the basis of investment losses. The class-action lawsuit is spearheaded by investors that lost $100 million through the platform.
If you decide to work with Yieldstreet, take the time to conduct your own due diligence on deals before making an investment. Ultimately, you are responsible for assessing your risk tolerance and making investments that align with your goals.
Biggest Difference Between Yieldstreet and Other Platforms
The most common crowdfunding investment sites are designed with a strong focus on real estate. Yieldstreet does offer real estate investments. But the platform offers much more than straight long-term equity investments in major real estate deals.
You’ll have the option to explore a wide range of investment opportunities through Yieldstreet that are unavailable on other sites. Whether you want to try your hand at investing in art or shipping vessels, Yieldstreet opens the door to these new opportunities.
Want more? Check out all of the best real estate crowdfunding sites.
Which investment platform is best?
In the world of investment platforms, there is no one size that fits all. The right investment platform for you will vary based on your investment preferences and goals. If you are interested in pursuing alternative investments with relatively low minimums, then Yieldstreet could be the right choice for you.
Yieldstreet provides both accredited and non-accredited investors the chance to invest in a wide range of alternative assets. The platform could be a useful starting point for established investors that are looking to expand and diversify their portfolios.
Want to work with Yieldstreet? Sign up with Yieldstreet today.