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YieldStreet Creates New Fund with BlackRock as Sub-Adviser

The YieldStreet Prism Fund has a minimum investment of $20,000 and a target distribution rate of 7%

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It was only a month ago that we covered Yieldstreet’s partnership with Citi, allowing YieldStreet investors to have access to private credit investments typically reserved for institutional investors. Today, YieldStreet announced a partnership with the world’s biggest asset manager, BlackRock. The partnership is specifically with BlackRock’s Global Fixed Income Group. In the past YieldStreet investors have had to invest in individual deals spanning unique assets from shipping containers to litigation finance.

YieldStreet has now created the YieldStreet Prism Fund, a closed-end fund which includes YieldStreet investments alongside corporate and sovereign debt managed by BlackRock. This will be welcome news to investors who are already familiar with YieldStreet, looking for an easier way to access a diversified set of investments. According to the landing page, the fund targets a 7% distribution rate (dividends paid quarterly) and requires a $20,000 minimum investment. There is an option for limited liquidity within approximately 15 months and management fees are set at 1.5%. The below screenshot gives you an idea of some of the asset types that are included.

In a video the YieldStreet founders shared that they issued request for proposals to several industry titans and landed on BlackRock. YieldStreet noted that they chose BlackRock due to their expertise, being the largest asset manager with over $7 trillion under management and their global presence, which will help source new deals across the globe. According to CNBC, BlackRock spent 18 months vetting YieldStreet.

As part of the CNBC feature co-founder Michael Weisz shared:

It’s a fund that’s not designed to be aggressive, it’s for passive income…It’s a fund where you’re getting access to some of the best management talent that exists in the credit space.

Like YieldStreet’s current offerings it is only available to accredited investors, those who earn over $200,000 or have a net worth excluding their house of over $1 million. YieldStreet currently has 200,000+ investors on their platform and according to the co-founders has not lost principal on any investment.

Conclusion

While we have been familiar with YieldStreet for a long time (See Peter Renton’s returns where YieldStreet is featured quarterly), this news alongside the Citi partnership is going to raise awareness significantly for YieldStreet. They have quickly become a leader when it comes to alternative assets and it will be interesting to see how returns track over time now that there is transparency into these assets.

My Quarterly Marketplace Lending Results – Q3 2019

My latest quarterly investment results show an overall 6.29% return for the year ending September 30, 2019

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I am certainly late with this but I have finally found the time to bring you my quarterly returns report for Q3 2019. Every quarter I share my marketplace lending investment returns with the world. I started doing this back in 2011 with my LendingClub and Prosper accounts and since then I have added many investment positions across a variety of investment vehicles and platforms.

Overall Marketplace Lending Return at 6.29%

After a consistent upwards trajectory for the past year my returns appear to have stabilized at least for now. My trailing 12 month returns for the year ended September 30, 2019 across all my accounts was 6.29% which is almost exactly the same as my last update (6.30%). My original six accounts, all with Lending Club and Prosper, were also relatively stable at 5.34% versus 5.48% last quarter.

I continue to move money out of my taxable LendingClub and Prosper accounts, focusing my investments here on my retirement accounts. My standout account continues to be Streetshares, the only one of my investments solidly in double figures. But I am also very happy with AlphaFlow, Money360, Yieldstreet and Fundrise as they are all returning more than 8%.

Now on to the details. Click the table below to see it at full size.

As you look at the above table you should take note of the following points: [Read more…]

Citi and Yieldstreet, the Bank Partnership No One Saw Coming

The newly announced bank partnership will give Yieldstreet investors access to private credit investments from Citi.

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There have been no shortage of bank partnerships in fintech, but this might be the most unique. Last week we learned that Yieldstreet, an online platform which offers investors access to alternative investments was partnering with Citigroup to offer investors access to their private credit investments. What is most intriguing about this announcement is that a big bank is opening up investment opportunities which were traditionally funded by institutional investors and hedge funds. I spoke with Milind Mehere, the CEO and Founder of Yieldstreet to dig deeper into this partnership.

One of the challenges Yieldstreet has faced is keeping investment opportunities available for investors. They currently have 300,000 accredited investors on the platform, but for over 2 years the demand has been insatiable. Most investment offerings fill up within minutes, if not seconds, creating disappointment in investors who miss out. Mehere’s ultimate goal is to continue to create homogenous and repeatable distribution channels. In order to access good supply Yieldstreet is always looking at interesting investment opportunities and the Citi deal is the latest example of that. It will bring $2 billion of assets to investors.

Yieldstreet currently advertises investment opportunities across real estate, litigation finance, marine, commercial, art and more. You can view some of their past offerings here. The deal with Citi will bring similar assets and may include other areas such as energy and infrastructure, railroad contracts, toll booths and even cell phone towers. These deals will be slightly longer in duration, providing steady cash flow over a longer period of time on assets that tend to be uncorrelated to the stock market. Speaking of long term investing, it is worth mentioning Yieldstreet’s acquisition in December 2019 of WealthFlex which will bring these investments into retirement vehicles. This is something that will be welcome news to investors given the high yielding nature of these investments.

The way Mehere views Yieldstreet overall is for investors to have access to a broad spectrum of investments ranging up to around 12%. The mandate with Citi will focus on paper which is either in the 5-6%+ range or around 10-12%.  Investors can expect the first deals to hit the platform in the next few weeks.

Yieldstreet investors can expect a similar experience when participating in the deals sourced from Citi and the investment opportunities will be marked as coming from Citi. While Yieldstreet is focused on expanding the number of offerings, they ultimately have the ability to accept or reject offerings. Mehere views their platform as a way to target investment opportunities which offer attractive returns. This means that the current asset classes aren’t necessarily the ones you will see in a year. One way for investors to achieve higher yields is due to inefficiency of capital and perceived versus actual risk. Yieldstreet wants to focus on investments which make sense, opportunities that are not overpriced and that are in areas where they have expertise.

In this way, Yieldstreet is an on demand platform with the ability to be flexible and dial up or down investments based on the current market. It’s important that Yieldstreet is careful with the offerings on the platform since all loans they put on the platform are pre-funded through a warehouse facility before investors are able to allocate. This distribution risk aligns Yieldstreet’s interests with their investor base. This warehouse facility was just renewed and increased to $250 million with Soros Fund Management. Beyond Soros, Yieldstreet works with other banks which provide leverage facilities.

When I asked Mehere about why Citi was looking to expand their base outside of hedge funds and other large investors he noted that ultimately it was a question best suited for Citi. His view though is that this group within Citi called Citi’s Spread Product Investment Technologies (Sprint) is always originating and sourcing opportunities of all kinds. He believes that Citi recognizes that the investment landscape is changing and they want to be the catalyst for this change. Challenger banks and other investment platforms have established strong trust and credibility with the end consumer and thus deals like these can be a strong channel for a big bank like Citi.

As far as what the future holds, Yieldstreet believes there is still lots of room to grow with the enormous size of the private credit market in the US. Mehere also thinks we are going to to see a transformation of behavior from investors over the next decade. Digitally native consumers are going to be increasingly interested in offerings like Yieldstreet. Currently the median age of those participating on the platform is 41. It’s going to be interesting to see where Yieldstreet goes from here as they look for further opportunities that in the past have not been available to individual investors in the US.

More on LendIt Fintech News on Yieldstreet:

Invest Like the Top 1% With Institutional Grade Investment Offerings from Yieldstreet

Podcast 99: Milind Mehere of YieldStreet

YieldStreet and LendingPoint Lead Fintechs on the Inc. 5000 List

The annual list of the fastest growing companies in the US features several fintech companies this year

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Every year Inc. Magazine releases a list of the 5,000 fastest growing companies in the country. They call it the Inc. 5000 and it is a celebration of the entrepreneurial spirit. You have to be a fast growing company to make the list.

The 2019 list was announced this morning, but before we get to the successful companies on the list, here is a look at the criteria Inc. set for the entrants:

  1. Have generated revenue by March 31, 2015
  2. Have generated at least $100,000 in revenue in 2015
  3. Have generated at least $2 million in revenue in 2018
  4. Be privately held, for profit and based in the U.S.
  5. Be independent (not a subsidiary or division of another company).

There were 239 companies that made the list in the financial services industry. Leading the pack was YieldStreet, who came in at #14 overall, closely followed by LendingPoint who was at #17.

In a statement on the YieldStreet website, CEO Milind Mehere said:

We’re proud to be named by Inc. as the 14th fastest growing private company in the United States, capturing the #1 spot in both the New York and Financial Services categories. We owe so much of our success to our incredible community of dedicated Investors.

LendingPoint CEO and Co-founder, Tom Burnside, had this to say about their achievement (more here):

Our platform saw more originations in 2018 than in 2015, 2016 and 2017 combined and at the same time our credit performance improved allowing us to facilitate more financing for consumers online and at the point of sale. We are incredibly grateful to our customers and proud of the LendingPoint team.

If you filter the list for financial services companies there are dozens of fintech companies that most of you would recognize. Here is the top 10 in the category that shows their growth percentage as well as their 2018 revenue.

Update: After I published it was pointed out that FundThatFlip also ranked highly on the Inc. 5000 (at #42) but were classified in real estate, not financial services. Honorable mention to them as well.

My Quarterly Marketplace Lending Results – Q1 2019

My latest quarterly investment results show an overall 6.09% return for the year ending March 31, 2019

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Put this in the “better late than never” department. Yes, I know it is late July and I am only now just publishing my Q1 2019 returns. Thanks to those of you who reached out but rest assured I am still committed to sharing my results publicly and I apologize for the extreme tardiness of this update.

I am happy to report this quarter that my returns continue to improve. Since hitting bottom in Q2 of 2018 my returns have improved each quarter. Both LendingClub and Prosper showed their best returns in almost two years as the underwriting changes that were implemented in 2017 have had a positive impact.

Overall Marketplace Lending Return at 6.09%

My overall returns for the twelve months ending March 31, 2019 was 6.09%. This is up from 5.35% that I reported in Q4 and 4.77% in Q3. My original six LendingClub and Prosper accounts had another full percentage point jump. Last quarter I reported the returns on those six accounts had jumped from 3.19% in Q3 to 4.16% in Q4. We see this quarter they are at 5.18%. This is quite a remarkable turnaround and while I still think 5% is not a high enough return for unsecured consumer lending, it is certainly moving in the right direction.

One point to note is that I am liquidating my taxable accounts at LendingClub and Prosper. I have a little too much exposure to consumer credit in my overall portfolio and so I will be focused only on investing in my IRA accounts there. I am moving my redeemed cash into other marketplace lending accounts as well as other investments outside of fintech.

Now on to the numbers. Click the table below to see it at full size.

[Read more…]

The Future of Idle Cash Held at Marketplace Lending Platforms

As interest rates rise marketplace lending platforms should offer a return on cash waiting to be put to work

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The marketplace lending industry has never had to deal with an environment where interest rates are increasing. We’re not talking about how loan interest rates affect returns, but instead how platforms handle idle cash. When interest rates were close to 0% it was no big deal that platforms paid nothing for the idle cash that builds up in your account. But now that many money market and savings accounts offer 2% or more there has become a real cost to keeping cash just sitting in a marketplace lending account.

For some platforms this is not much of an issue since there are plenty of loans available and the minimum investment per loan is relatively low. But for many platforms, particularly in the real estate space minimum investments are high and cash builds up, sometimes to several thousand dollars before an investment can be made. These platforms may need to consider offering an incentive to investors to keep them happy.

YieldStreet Becomes First Platform to Offer a Return on Idle Cash

YieldStreet is one such platform. The minimum investment is often $10,000 or more in new deals so cash has to build up significantly before it can be reinvested. Also, with investor demand strong it is not easy to deploy idle cash since many of the deals are fully funded within minutes and there is no auto-invest feature. So, cash tends to build up and the cash drag problem has an impact on investors overall returns.

YieldStreet’s solution to this problem is YieldStreet Wallet which is a savings account that earns 1.6%. What’s interesting is that while you must be an accredited investor to invest in investment opportunities on the YieldStreet platform, this is not a requirement to hold a YieldStreet Wallet account. Similar to other savings accounts, users are restricted from making more than six transactions per month, deposits excluded. Funds are FDIC insured since the account is held at Evolve Bank & Trust which is an FDIC insured bank. One of the major benefits to investors is that they no longer have to worry about timing ACH transfers for new investments since the account is held at YieldStreet. Distributions and payments will also be made to the YieldStreet account so you automatically earning interest as loan payments come in.

My account was automatically upgraded to the YieldStreet Wallet and I have been earning 1.6% on my idle cash for over a month now. And for new transfers cash starts to earn interest as soon as the money is received.

Will Offering a Return on Idle Cash Become Standard Soon?

YieldStreet’s offering could be the start of a new trend. They are the first to address the problem of idle cash but they most certainly won’t be the last. The Federal Reserve is expected to increase interest rates three times in 2019 which will put the federal funds rate near 3%. As interest rates continue increase there will be more pressure on platforms to provide investors with a yield on their cash. Seems like a no-brainer to me to keep investors happy.

Invest Like the Top 1% With Institutional Grade Investment Offerings from Yieldstreet

An introduction to marine financing and more from high yield investment platform Yieldstreet

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I started investing on Yieldstreet about a year ago because I liked the unique investment offerings the company had. I invested in a pool of litigation finance loans, something I had never done before. Since then Yieldstreet has added some more unusual investments never before offered in marketplace lending. For more on Yieldstreet you should listen to my podcast from last year with CEO Milind Mehere.

I caught up with Milind again this week to talk about these new offerings and also to get an update on Yieldstreet’s progress. The first thing I wanted to talk about was the two unique investments they recently had on their website for marine financing. I should also note that Yieldstreet is available only to accredited investors at this time.

A First for Individual Investors: Marine Financing

First, let me tell you what marine financing isn’t. It is not recreational boat financing as Milind was quick to point out. These are commercial ships or to be more accurate Dry Bulk Ships designed to carry goods such as grain, coal, metals or forest products.

Yieldstreet purchased two vessels to be leased by a European ship management company. This is a somewhat complicated deal structure that Yieldstreet explains nicely in this tutorial on their website. In their first transaction they offered 8% interest on a 36-month loan term. The minimum investment was $20,000 and they filled the $18.1 million deal with just over 500 investors, many of whom had never invested on Yieldstreet before.

[Read more…]

ABOUT LENDIT FINTECH NEWS

LendIt Fintech News, Powered by Lend Academy, has been bringing you all the news and information about fintech and online lending since 2010 when it was founded by Peter Renton. We not only have the industry’s most active news site, but also the largest investor forum and the first and most popular podcast.

We are a team of fintech enthusiasts who have been covering the industry for many years. With a deep knowledge of online lending, digital banking, blockchain, artificial intelligence and more our team covers the daily news and writes in-depth editorials.

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