At Yieldstreet, the goal is to make alternative investments more accessible to larger swaths of investors and to help them generate passive income. According to the CAIA association, assets in alternative investments have grown to almost $16 trillion, yet alternative investments haven’t been uniformly utilized across all investors’ portfolios, despite their potential benefits.
As we head into 2021, Yieldstreet remains steadfast in its desire to expand access to alternative investments and has identified the following top 5 trends in alternative investments that the company is focused on to deliver unique opportunities to its members.
1. Reconsider the 60/40 Portfolio
Historically, investors have relied on typical portfolio allocations of 60% in equities and 40% in bonds in an effort to balance their portfolios between growth and protection. Looking forward, the traditional 60/40 portfolio may no longer provide the kind of benefits it had provided in the past.
This is where alternatives come into play, which offer returns typically uncorrelated to equities and bonds and can help mitigate risk in portfolios. In addition, private markets such as private debt and equity may offer attractive returns in excess of public markets, due in part to the limited liquidity they offer.
2. Healthy Consumer Sentiment
Despite the stressors resulting from the pandemic, consumers appear to be in a relatively stable to strong position. A large driver of this has been the reduction in discretionary spending alternatives, such as travel, dining out, sporting events, and other outside-the-home entertainment options. Depending on the final legislation, a restart of the federal unemployment insurance program along with any direct payments to individuals, would further benefit consumers.
3. A Travel Comeback Spurring Commercial Real Estate
Yieldstreet believes hotels will return in full force, or at least those in attractive locations that have maintained a level of quality. The market will be bifurcated between winners and losers, with those in less-desirable locations and those with sub-standard quality to likely be challenged as demand is no longer expected to outstrip supply as it did to support lower-end hotels prior to the pandemic.
4. A New Generation of Art Buyers
The first driver of change in the art market is the increase in bidders from the millennial generation, which jumped over 22% from 2019 to 2020. Their continued interest in the art market will likely continue to propel the market even higher. The second driver of change is the move to online bidding, which saw sales totaling over $400 million during the first half of 2020, a quadrupling of the first half of 2019.
5. A Continued Surge In Legal Finance
Legal Finance has rapidly grown over the past few decades. With the aftermath and lasting effects of COVID-19, the legal industry, coupled with legal finance firms, are expecting a substantial increase in litigation, ranging from insurance policy rescissions to contract disputes. Yieldstreet anticipates that pre-settlement funding will be greatly needed over the next few years, as the world recovers from the pandemic, creating an opportunity for those who fund legal finance.
