Yieldstreet Comments on Legal Finance as Investment Option, Reveals that Platform Returned $600M to Investors in 2022

Yieldstreet notes that in this challenging market environment, where stocks and bonds have been largely underperforming, investors “may be looking to allocate their capital to assets with little correlation to public markets.”

Yieldstreet points out that one of the most, if not the most, uncorrelated alternative asset class “is legal finance.”

Yieldstreet claims it is “one of the few platforms that offers legal finance investment options.”

They’ve offered 80 deals to investors, “which have covered roughly $500 million of investment commitments.” To date, investors in the space “have a net annualized return of 13% and they’ve recovered approximately $350 million in proceeds.”

Legal finance is “an investment strategy that monetizes the contingent assets inherent in litigation.”

Legal finance is “based on the concept of investing in or lending against lawsuits and the litigating firm’s contingency fees.” The amount a plaintiff “ultimately receives, and the law firm’s fee is based on the outcome of litigation.” The strategy involves “providing investment capital to pursue those cases or seeking to borrow against these lawsuits.” Litigation often “takes years and is capital-intensive.”

Unlike most assets, legal finance outcomes “aren’t materially impacted by typical economic indicators like by interest rates, inflation, corporate revenues, or consumer spending.” Its performance “is strictly tied to the outcome of the case.” Therefore, investors “can use legal finance to hedge against some of the current market headwinds.”

As noted in a blog post, Yieldstreet aims to mitigate the risk with investing in legal finance.

Even if legal finance “doesn’t correlate to public markets, investors should be aware of the drivers of legal finance risk.” Certain legal finance investments “are non-recourse, meaning repayment is tied solely to the case and investors’ principal may be lost if the lawsuit is unsuccessful.”

Investors are “compensated by the potential to generate high returns.”

Yieldstreet tries “to mitigate the risk associated with investing in legal finance by looking at a specific set of factors when deciding [their] case profile.”

For more details on this update, check here.

In another update, it was noted that despite it being one of the worst years on record for a traditional portfolio, private market performance and demand remain strong as Yieldstreet breaks several key records in 2022.

They are pleased “to announce [their] members have now made $1B in investments on platform in 2022  — the most ever invested in a single year.” Since their inception in 2015, more than $3B “has been invested in total.”

Yieldstreet Founder and CEO Milind Mehere said:

“Thank you to our investors for trusting us and to the incredible global team who made this happen.”

2022 also marked their highest year of investor distributions “since inception.” In total, we have “paid out more than $600M in returns and principal to investors this year.”

In August, their investors “realized their greatest return to date with Williamsburg Multi-Family Restructuring Equity.”

The opportunity “delivered a 41% net annualized return, surpassing initial targets of a 15-17% net annualized return.”

Yieldstreet believes private market alternatives “provide a key level of diversification to help grow and protect your wealth.”

In periods of public market volatility, their impact is “often amplified; during the Global Financial Crisis and the five most significant stock downturns since, private markets have delivered an average of 16% greater returns than the S&P 500.”

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