YieldStreet, an alternative investment platform that largely caters to accredited investors under Reg D 506c, has announced a new partnership with BlackRock (NYSE:BLK) on a $1 billion fund that will target retail investors.
Michael Weisz, founder and President of YieldStreet, hit the studios of CNBC to share the news.
BlackRock has emerged as a leading voice in the push to provide retail investors access to private securities in highly diversified funds. As public markets have declined, private securities offerings have risen as an effective path to drive capital gains. Currently, the Securities and Exchange Commission (SEC) is reviewing a path to enable access to these types of funds as part of a concept release and harmonization review. The SEC is also reviewing the definition of an accredited investor which may impact the ecosystem as well.
Weisz noted that typically retail misses out on significant yield and consistent passive income. The new fund will not be highly liquid and only after a period of time will investors be able to redeem a portion of their shares in the fund.
Weisz added that only 10% of individuals hold investment alternatives and this usually takes place when they are in their sixties. YieldStreet’s average investor age stands at around 42 years of age.
According to the YieldStreet website, most YieldStreet offerings are asset-based and backed by validated collateral such as a real estate property or the value of a vehicle. This collateral acts as principal protection if a borrower goes into default.
Some investments on the YieldStreet site start at just $5000 with others holding a $20,000 minimum.
Current and past offerings include real estate investments, art, marine vessel financing and legal settlements.
To date, YieldStreet has funded over $1 billion in investment offerings making over 448,000 payments while returning more than $538 million to investors.
YieldStreet also offers a bespoke “Wallet” where users may earn 1.45% annual interest on any cash held in the account.
Listed on the site today is the Prism Fund in conjunction with BlackRock. Described as a “portfolio builder” the fund is said to be a basket of fixed-income investments across multiple sectors, managed by BlackRock coupled with select YieldStreet assets. The fund requires a $20,000 minimum and is expected to generate a 7% rate of return. The initial tranche has been pegged at $15 million and opens on February 25, 2020. It is not immediately clear if this is the fund that will be (at some point) offered to retail investors.
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