YieldStreet Expands Offering To The Masses Through Deal With BlackRock

on Feb 18, 2020
  • YieldStreet offers a crowdfunded approach to alternative investments.
  • Accredited investors can invest in student housing, art, or shipping through YieldStreet.
  • YieldStreet announced a partnership with BlackRock to expand offering.

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New York-based YieldStreet offers clients access to investment opportunities that were once reserved for the super-rich and the largest hedge funds. YieldStreet’s unique crowdfunded deals give investors the ability to group capital together and invest in student housing, art, shipping, and other sectors.

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Until now, investors were only able to buy into one specific product at a time through YieldStreet. On Tuesday, the company announced a new partnership with BlackRock that would give investors exposure to an “all-in-one” diversified fund, according to CNBC.

The Prism Fund

YieldStreet and BlackRock named their investment tool the Prism fund and it will consist of a combination of YieldStreet’s esoteric investments and BlackRock’s corporate and sovereign debt, CNBC reported. The fund expects to pay investors a 7% annual distribution and comes with a 1.5% management fee.

After four years of operation, YieldStreet expects to liquidate the assets and return the initial investment to shareholders.

YieldStreet co-founders Milind Mehere and Michael Weisz told CNBC that BlackRock spent 1.5 years evaluating a partnership. BlackRock needed to be certain that a push into crowdfunding platforms is right for the global investment behemoth with more than $7 trillion in assets under management.

Still Not Open To Everyone

Weisz told CNBC the partnership with BlackRock will prioritize creating passive income in favor of being aggressive. The objective is to give investors new access to “some of the best management talent that exists in the credit space.”

However, the fund is not available to every investor. Those who wish to take advantage of the new product need to satisfy the Securities and Exchange Commission’s definition of an accredited investor. This means an investor needs to either earn more than $200,000 per year or have a net worth north of $1 million.

YieldStreet’s Track Record

YieldStreet returned more than $100 million in interest payments to its more than 200,000 investors in the past five years. The company has yet to lose any principal in a deal but the company is fully aware it was born at an opportune time.

“I’m not here to tell you that Milind and Michael are the world’s smartest investors and there’s never going to be something that goes wrong,” Weisz said. “We understand that when winter comes there will be challenges, but we take comfort in knowing that there’s underlying collateral. We feel confident and comfortable with what that represents, and so far we’ve been right.”

Alternative Investment Crowdfunding