YieldStreet is not slowing down the creation of new and unique investment offerings. The latest partnership with BlackRock is bringing a new twist on diversification and access to some of the best money managers in the world. With the Prism fund, investors have the potential for cash returns with a combination of BlackRock and YieldStreet products. YieldStreet partnering with BlackRock hopes to bring both credibility and solid returns to the crowdfunding industry.
YieldStreet has been giving access to unique alternative investment opportunities for over five years. They offer access to invest in innovative income-generating products. These products have historically had a low correlation with the stock market.
Most deals are backed by collateral covering a wide range of industries such as Real Estate, Marine assets, legal finance, and collectible Art. With YieldStreet, investors can invest in individual deals or funds. The funds offer further diversification as YieldStreet managers bundle assets together for more exposure with a potentially smaller initial investment.
To date, YieldStreet has seen over one billion dollars invested through its platform, with nearly 200,000 investors. Through these investments, they’ve returned over $600 million back to investors in the form of interest and principal payments.
YieldStreet also features investments with short duration requirements. They offer investment in assets with anywhere from 6 months to 5 years to maturity.
YieldStreet Partners with BlackRock
Recently, YieldStreet announced a new partnership with money manager giant BlackRock. With the deal, they’ve created the actively managed Prism fund. This fund will comprise of YieldStreet investments along with corporate and sovereign debt, which will be managed by BlackRock.
YieldStreet co-founder Michael Weisz was quoted as saying, “It’s a fund that’s not designed to be aggressive, it’s for passive income.” Weisz goes on to say, “It’s a fund where you’re getting access to some of the best management talent that exists in the credit space.” Typically investments such as this are limited to large institutions such as hedge funds or billionaire family offices.
BlackRock is a giant global investment manager. They offer a range of investment solutions for individuals, financial professionals, and institutions. At last check, the behemoth manages a staggering $7.4 trillion for investors across the world. The deal shows even more evidence that crowdfunding platforms such as YieldStreet are ready for broader adoption.
Also, the new types of products offered with partnerships such as this have the potential to give investors unique diversification. These funds have the potential to be non-correlated to the public stock market, where many smaller investors historically have large amounts of their net worth. Beyond that, the fund focuses on quarterly income payouts, which have the potential to be higher than the average stock market dividend yields.
BlackRock’s global head of fixed income product strategy, Robert Stanley, was quoted as saying, “by combining BlackRock’s expertise in fixed income investing with YieldStreet’s technology know-how, this fund provides investors with attractive opportunities beyond their usual sources of income.” The Prism fund has a distribution rate target of 7% paid out in quarterly distributions. Fees are 1.5%, and there’s a minimum investment of $20,000.
Since YieldStreet’s founding five years ago, the economy has done relatively well, and investment returns have been positive. In fact, the company reports they have yet to lose principal in any of their investments on the platform.
One thing to watch in the crowdfunding space is the ability for companies such as YieldStreet to weather the storm when the economy turns, and business cycles change. In almost every interview I’ve heard with the co-founders, they acknowledge it’s not a matter of “if” but “when” market conditions become more difficult.
Michael Weisz and Milind Mehere feel confident knowing their offerings include underlying collateral. The challenge will be surviving through the twists and turns of the economy. If they can display non-correlated returns compared to the stock market during the next downturn, it will be a massive victory for crowdfunded companies. YieldStreet partnering with BlackRock will increase the odds of this favorable outcome.