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Hi everybody, welcome to Uncorrelated Assets. We are going to let people take their seats and get started in about one minute.

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Okay, we're gonna let a few more people take their seats. We'll get started in about 30 seconds. Thank you.

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All right, let's get started. Looks like folks are here. Welcome to Uncorrelated Assets in Times of Volatility and High Rates. Thank you, everybody, for joining. We've got our panelists here. We've got our audience here. We all know that investors are diversifying right now into private market assets. We've got three super knowledgeable folks to share their insights and answer your questions. My name's Eric Cantor. I'm your moderator today. I'm the CEO of Vincent. We help individual investors navigate private markets.

which we aim to accomplish today. You can find us at www .withvincent .com as in invest with Vincent. Now I'm going to provide an overview of the next 50 minutes or so of this chat, which will come in three parts. First, we're going to introduce these awesome managers who will be speaking on your panel today. Second, we're going to ask them to talk us through a number of the top issues facing everyday investors as they navigate private markets in today's environment. And third, we're going to open it up to you all, to the audience for questions.

to hear what's on your mind. At any point along the way, please ask a question using the Q &A button in your Zoom app just below. We'll pose those questions to the panelists and if we run out of time, we can follow up with the written responses via email. Great. So let's begin by introducing the managers we have with us today. For each of you, why don't you tell us briefly about yourself, your firm, what your role is there, the investment products you offer and which customers they're really ideal for.

and maybe one thing you're excited about right now. Let's start with Nelson. Perfect. Thanks so much, Eric. Great to be here. Hi, everyone. My name is Nelson Chu, founder of Zio Percent, and we are an alternative investment marketplace focused specifically on private credit. So for those who don't know, private credit is effectively non -bank lending, everything from small business loans, consumer loans, factor receivables, litigation finance, equipment leasing, the list goes on. So you do get access.

into these different types of opportunities, both on a direct individual borrower basis, as well as in some of the managed products that we offer. Been around for about six years now, done well over a billion, close to two billion in flow, if you count all the things we've ever underwritten. And that's been for retail investors, family offices, investment advisors, credit funds alike. So it's been a fantastic run for us. And we do think that private credit is one of the most exciting asset classes right now. You're seeing it all over the news.

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I think it's a good time to be us, at the very least. We're very fortunate to be here today.

Awesome. Michael. Hi, thanks for being here. My name is Michael Weiss. I'm the founder and CEO of Yieldstreet. Yieldstreet is the largest online alternative investment platform. Over the last number of years, our customers have invested about $6 billion across a diversified set of private market opportunities. So our core belief is that in order to have a healthy portfolio, folks need to be able to diversify into the private markets.

We think your portfolio is going to be at least 30 % in alternatives over the next number of years. We have at Yieldstreet created the opportunity for investors to invest in things like private equity, private credit, real estate, and other asset classes to help you get a really well -rounded portfolio. Our core customer is going to be an accredited investor and into that QP audience. We're super excited about sort of the overall market of alternatives. For those of you...

who have joined us today, it's because you're interested in alternatives. And I'm sure you're either currently invested or have been reading about and learning about why alternatives are so important. And so we've been at the forefront of that experience. We think about how to enhance the customer experience, how to simplify the customer experience, how to educate people. And we try to use technology as our weapon in streamlining that process and both creating a beautiful user experience, educating folks and delivering the best products to you.

Awesome. Howie? Hi, everyone. My name is Howie. I work for Forge, and my role there is I head up innovation, financial product innovation, as well as investment solutions. Forge is basically a gateway to private market investing, specifically as it relates to venture -backed late -stage growth equity. We are both, think about us as an ecosystem play. We have both a liquidity solution in that you can actually trade, buy, and sell.

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single names as well as SPVs on the platform. We have a fast growing data solutions in which we provide a lot of data analytics to inform you about investment decisions of which we then have the option of financial product innovation within the data solution as well. And we have a custody solution in which you can actually have invest with your IRA money and that sort of thing. So I think one thing that we're really super excited about FORGE, traditionally we have been dealing with a lot of accredited investors and QPs.

to get into this particular asset class. But lately there is just so much data and democratization in the space that we're starting to see financial product innovations such as index products, it's actually not possible when it comes to this particular space. So happy to tell you more about it later, but that's in a nutshell what we do. Great. Let's find out who else is here. Take a look at the audience. A few of you filled out surveys on your way in.

and it showed us just who we're talking to. We've got a lot of investment experience out there. The bulk of you have significant experience with private markets, a small cohort as well, beginners, but mostly advanced pros and some people with a few deals under their belt. We're talking to an accredited audience primarily, which makes sense since all of these managers serve accredited investors and QPs. We've got a good geographic spread, spikes on each coast, but also 30 states represented here in the US.

And most of you are feeling either bullish or neutral on private markets. We did not get a lot of fearful sign -ups. So we'll try to keep that in mind as we walk through this conversation. Before we get into it, let's read a quick disclaimer that's a part of everything we do. Nothing in this presentation should be construed as an offer to sell securities or a solicitation of an offer to buy securities. All investments involve risk and the possibility of loss, including loss of principle.

and neither past performance nor forward -looking information is a guarantee of future results. Now that we know that, let's kick off this conversation. We're going to start with a few data points that we picked out just to set context so the investors who are working in today's market can orient where we are and then look at the products that we're talking about relative to that. So it's an unusual macro on a number of fronts. The first one that's been talked about endlessly is inflation, which continues to be above the target set.

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though it has been cooling in the last year or so. But that's, of course, led us to a situation where interest rates continue to be what has been termed higher for longer. We're waiting for that rate cut. It's actually, it's hard to believe, but last summer was the last time that rates actually had any change. And that has a big influence on all the asset classes, really all asset classes, especially the ones we're talking about. Lastly,

we are still seeing a very bullish market, right? A lot of all -time highs in different asset classes, continued growth in public equities, a lot of that coming from confidence that at some point around the corner, whether it's next quarter, next month, next year, that there is a rate cut bound to happen. So against this backdrop that we wanna focus this conversation on, let's look at what investors are doing. So the biggest investors, some might say the best, we'll say the biggest for now.

they're increasingly allocating to alternative assets. Private credit shows up on here, as Nelson mentioned. Real estate is a big one. Private equity, which also includes venture. So this is where the big family offices and other pop investors are playing. But how does that translate to us, the everyday investors? Well, there's an expanding universe of products targeting us as well. They range from different levels of liquidity, different minimum asset types.

We've talked about them a lot and we'll continue to do so. These are the products that we have to choose from. And these are the managers that we invited here today. We've looked at a number of products in our own research, invited some today, and we'll talk about other ones that aren't represented today. So with that foundation in mind, let's go kick the tires and find out the pros and cons of some of the various approaches to allocating to privates for ourselves, for the individual investors who are seeking this out. First question to the panel.

As an individual investor, I'm not a billionaire, I'm not endowment. I'm just somebody trying to make returns and safeguard the assets I've got. Should I be interested in alternatives? We saw how the big players allocate, but what does that mean for me? Should I mirror that? Why don't we start with Michael on that?

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I think the answer from my perspective is emphatically yes. I would go further and to say, you can't afford not to be. And so if you take a step back, I think around 96, we had, I'm going to say roughly 7 ,300 public companies. Today you have about 4 ,300 public companies. You have a 40 % decline in great businesses to invest in in the public markets. We had roughly a $250 billion private market ecosystem 20 years ago.

We're near $15 trillion today. Our parents had the opportunity to invest in every great company that was coming to market. GE, Walmart, Facebook, you name it, it's a big company, you remember it. They had the opportunity to have that in their portfolio, to have access to those companies, to participate in their growth, to participate in their credit instruments, to generate passive income. You don't today.

The private markets are too big, too powerful, too strong. If you don't have diversification in your portfolio that includes private markets, you simply don't have a healthy and diversified portfolio, in my opinion. So I think you absolutely should have exposure to private markets. It should be diversified. It should mirror what we were taught a long time ago, which is the idea behind 60 -40 was a balance between passive income and growth. You could do that in the private markets with credit.

on the passive income side and with equity link on the growth side. And so I think we absolutely need to be trying to mirror that. I would go one step further. I was having a conversation with my team on a different matter, probably an hour ago. And I said, you know, one of the funniest things I tend to notice, maybe frustrating, is you see so much traction online, on social media, on like that next financial guru. Look how I made a billion dollars. Look how I made a million dollars.

First of all, none of them have been around for five years and they're all trying to do something new. I think what's interesting about the folks on this panel here in the conversation, what it seems to me as we're all trying to do is make something accessible to a wider audience that's been done by some of the biggest and best investors for a long time. So Nelson's opening up private credit, Forge is opening up pre -IPO shares, Eel Street's opening up broadly alternative investments.

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None of us are trying to pitch that next new brilliant idea that makes us special. Rather, we're trying to share with you the opportunity to invest like those major institutions, those family offices, those endowments in a healthier, more diversified way. That would be my opinion. Great. Howie? Yeah, so I think very much echoing what Michael just said. I think a couple of themes that we kind of picked out from there is that,

you know, the investment opportunity set that I think Michael was alluding to, right? There is just a huge investment opportunity set in terms of the private space. And especially when it comes to Forge, we are kind of like the close cousin, if you think about it, to exited companies. So people tend to think about growth equity, small cap or growth sort of tech stocks. When you look at that investment opportunities that, you know, there's just a lot of companies staying private longer. That is a secular trend. That secular trend is not going to change.

So for that reason, then a lot of the wealth accumulation would actually happen pre -IPO, right? So it's no surprise today when you sort of think about how people investing in growth stock post -IPO return, especially sort of after the lockup period, usually is more lackluster than people could get in pre -IPO. So I think that is actually making the case for allocating to alt and not all alt are created.

equal, right? When you think about all, you can have the easier to access one, like your real estate, your commodity, you have ETF to access those. But I think we're talking about something a little bit different here. We're talking about private credit. We're talking about private equity, venture growth equity. So I think that the idea here is that the key here is yes, you do need that. But can you access that? I think that that is the key point here, providing access. I think that's what all of us are trying to do here.

to democratize, I know democratize is a buzzword, this particular asset class, I think that is actually the key, but absolutely we should have it in the portfolio. Great, Nelson? Yeah, I think given the name of this webinar and also the participants on here, we're all gonna have a very, very biased in favor of alternatives, I'm sure, but it's not without good reason, right? At the end of the day. And I think I can speak for us at the very least in particular.

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Anybody who's invested in the S &P, when you see that graph, it's always up and to the right. And that's all wonderful. And so I think there is always a place for equities in your portfolio. And it will be probably for most people, the big majority of their portfolio, which makes total sense. The question is really, what do you do with the rest of it? How do you get that diversification? And the truth is the equity markets themselves have also been some of the most volatile they've ever been in the last few years. And that's thanks to a lot of different factors, whether it's...

the different types of traders like retail traders that have come to market, whether it's the fascination with zero data expiry options, it's driving a ton of random market activity. And alternatives themselves, especially in some asset classes specifically, can be very, very uncorrelated. So you do want at least some exposure in a situation where when the markets are going up and down and fluctuating like crazy, you have an option to be able to have consistent or steady returns that aren't tied to the equity markets. And again,

Lots of bias here, but private credit has historically proven that out, given that we've been around for six years and we've seen a zero interest rate environment where everything was booming. We had a COVID environment where everything changed. We had a post -COVID environment, you know, Fed rate hike environment, and we've been able to see how private credit has reacted in that timeframe. And it's proven to be, again, fairly uncorrelated, right? So equity markets go up and down as long as in private credit, the underlying assets are performing, it becomes a very interesting alternative and option for investors. So.

The best thing you can do is diversify at the end of the day. And all of our platforms on this webinar today do give you that option to make it more accessible because historically it was very difficult to get into these asset classes and now it's been easier than ever. And so, you know, we are definitely very optimistic on the premise of having alternatives in a portfolio.

Let's double click on what you just raised, which is also the title of this event, which is uncorrelated, right? So these are volatile times. These are unusual market conditions. How do alternative assets tend to perform in these environments? Is it asset class specific? Like, what are we looking for when we're looking at these different asset classes? Maybe start with Howie on this one.

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Yeah, I think in terms of the different types of asset classes here, in terms of growth equity, this is definitely going to be a lot a little bit more correlated than public market equity than say something like private credit, right? So, but if you kind of take a step back, it is still a source of return, and it is still a source of diversification. And if you are individual investors, I think, you know, a lot of people are buying single names and whatnot, that's great if you actually have a view on alpha, but alpha is a zero sum game, someone loses money, someone is going to win.

someone's going to win on the other side. But I think that diversification is probably as close to a free lunch as you can get in a long -term buy and hold portfolio. So it's a source of diversification and it's a source of return, just to recap that. And I do think that when it comes to the way we think about high volatility and high rate when it comes to this particular asset class is that there's typically a lead -lack effect. You typically are seeing the public market leading first.

You'll see a lot of AI names and Nvidia and whatnot, they're actually kind of having a bull run. And then usually takes about like six to nine months lag into the prep market. So if you actually have the information and have the data, you could potentially tactically allocate to kind of like maintain your overall portfolio exposure.

Nelson, you raised this, you wanna go into the correlation? Yeah, yeah, no, for sure. And I think just to play off what Howie just said, the public markets are definitely the bellwether, right? And I think for specifically things like startups, startup equity and things like in venture investments, they are very much being comped to public markets, like the valuation multiples, all that stuff, right? Especially the later stage you get. But even in this cycle, you've seen earlier stage startups.

kind of be okay from a valuation standpoint, from a multiple standpoint, because they have so many more years before they go public. So in certain asset classes and certain stages of asset classes, it could be very correlated or very uncorrelated. When it comes to private credit, in our instance, at the very least, because we've seen so much volatility in the equity markets, we've seen how investors react, right? And I think obviously credit is very much tied to rates. We've found that retail investors, like with all the data that we have, it's...

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proven to be pretty consistent. They want 10 to 12 % above the risk -free rate. That's just been the case, right? So before the zero interest rate environment, they wanted 10 to 12%. And then now they want 15 to 17%. That's like consistently what we're seeing, right? Family offices, probably a little bit less risky assets. And so they want eight to 10 % above the risk -free rate. So you're seeing that's where they're saying, and they're settling down at. And then credit funds go six to 8%. So this data has been seen time and time again.

And even when you look at, we're going back in time, we've done 650 deals now at this point. We had, you know, cost of capital or yield for investors for things like small business lending, which has just gone through the wringer the last few years. Pre -COVID, it was 10, 12%. Peak COVID, it was 17%, I think, in terms of returns, because it was just no businesses, no cash flows, nothing open. Post -COVID, it came down a little bit. And then post -FRED rate hike, it's now tracking closer to like 18, 19%. Right, so right now,

returns for small business lending in the market that we play in is higher than it was during peak COVID, but no businesses were open, which is just fascinating to observe. But you're seeing sort of that's the difference and that's sort of the reaction to times of volatility and times of varying rates. And it is very much driven by sort of what the market is dictating. And we give people that option to basically tell us what they expect to earn based on the level of risk they're taking relative to risk -free rate. That's kind of the beauty of private credit. That floating rate structure makes it very interesting and enticing for investors.

Michael, last thought on this issue.

In summary, I think that more assets have a degree of correlation than people are giving it credit for. Alternatives is a catch -all phrase. It sort of really defines just not stocks and bonds. So I'll use like different extremes. Real estate, highly correlated to rates. The borrowing costs they trade on cap rates, you know,

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rate cap expires, there's real estate market is always very, very much going to respond to the interest rate environment. Litigation finance, for example, is often going to have almost no correlation. Typically in the way folks think about something like litigation finance, you're looking at getting paid from maybe a major municipality or an insurance company or a Fortune 500 organization.

And so the collectability risk really doesn't change depending on rate hikes or these types of environments. So there's very low correlation. Overall, the message that I would share is just thinking back to the audience, right? You said 75 % of the folks here are credit investors. That's very much the world in which I play in all the time. What we've learned is that there's a portion of people's portfolio that they're excited about being very active about. They want to pick individual investments.

They want to know how this deal is going to be different than that. They may be passionate about buying into a private credit fund that we offer or buying into a Formula One team that we're co -investing in or buying into an aviation private equity fund. But as they scale the total size of their wallet that they're contributing to the alternatives market, they want to have a little bit more of a passive and more diversified approach. Ultimately, I think that's the key.

Like the key isn't trying to figure out how you're going to do an end run around correlation because the market is going to show you that it will do things that you don't anticipate. It'll take rates from zero to five much faster than you ever imagined. And as a result of that, there are going to be a whole bunch of implications. And so like in the, you know, in the small business world or even at the corporate level, these large businesses are having to deal with a lot of higher costs as a function of a higher interest environment. So,

we could be lending at a higher rate, but the businesses are also needing to tend with what that means for them. So the key, as I believe, is to be invested in a balanced and diversified portfolio so that you can get the benefits of that portfolio effect in the private markets. Where I would agree that there's broadly less correlation is as it relates to volatility itself. So the vol within the private markets is just,

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much, much, much lower than in public markets. And so if you have an asset that is performing, it will continue to perform at a steady state, which is just different than what you'll see as an automatic reaction to public markets. So summary is a lot of correlation. There's different degrees of correlation even within the private markets. Key is have a healthy portfolio, have a diversified portfolio.

So just following up on that, I mean, as an investor, I should have a diversified portfolio. I should have some private market exposure. How do I do that? Right? I can stock pick, right? I can go and say, this litigation finance deal looks good. This private credit thing looked good. I want to buy Stripe or, you know, SpaceX, or I can find a manager, right? A fund manager who's going to put me into some diversified set of assets. Or maybe there's some other ways to do it. There's some reads, there are some other structures that are somewhere in between. So how do you think of...

investors building their portfolio, let's say, especially in the early part of that adoption. Maybe, Michael, keep going since you were already going on this point. I like that question a lot because that's something that we're very passionate about and something that we particularly set out to make strides in. And so here's how we see sort of the market has sort of evolved over time. So we started Yieldstreet about nine years ago.

At the time, people thought we were nuts. I remember my dad saying, like, are you crazy? You're running a couple hundred million dollar fund. You're doing quite well. Like no one's ever going to send you 50 grand through the internet. Right. And so we've come a long way in how people think about investing online and how they are involved with the portfolio and the adoption of private markets overall.

Where we are today is in the last couple of months, you've seen Schwab announcing that they're bringing private markets to their customers. You've seen Morgan Stanley say we're opening a private market desk. You see wealth managers and REAs doing everything they can to find a way to help their customers diversify. And so the conversation and the acknowledgement around private markets is at its height that it's ever been.

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The challenge, Eric, is still very much that question. It's like, okay, I know I need private market exposure, but how do I do it? How do I build that portfolio, either for myself or for my client? And that's been difficult to answer over the last number of years. The experience that we provided and many others provided, whether you were a large bank or an independent advisor or an online platform, was, hey,

or Yieldstreet, I'll speak to us, you could come to the platform and you could pick from a number of investments that are available at any time. And you might see some real estate offerings. You might see a KKR fund or a Stepstone Growth Equity Fund. You might see a Formula One opportunity. You might see a litigation of finance. We bought the largest independent art lending business from Carlisle called Athena. So you might've seen some of those opportunities. And you would go out and...

we would try to do the best we could to provide content and education and you would pick the different investments that you like. And I think that just as a side note, we could talk about it later, like providing the right content and the right user journey and education is such an important part of our responsibility to educate the market and help them make those decisions. But we'll put that aside for a minute. The challenge is not everybody knows how to pick.

between this private credit deal and that private credit deal, or this real estate deal and that one, or this pre -IPO company and that one. And so what we learned was, going back to the metric that we shared about the number of public companies is, when you want to cross the chasm from early adopters to an early majority and continue going, you look at history, there's typically two things that happen. There's technology innovation, and there's ease of use, there's product packaging. So if you want to think about stocks, and 66 % of people own stock today, over 60 % of people do. How'd that happen?

Think of mutual funds, think of ETFs. You saw even this year when Bitcoin and crypto became ETF eligible, the level of adoption and how that caused a spike in adoption and in value. So what we've been missing in the private markets is that similar experience. How do I go somewhere, tell them a little bit about myself and they come back and say, okay, here's a one -click solution to get right into alts.

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Give me that diversified portfolio, include it all, private equity, private credit, real estate, emerging assets. That hasn't existed. We've built that over the last 12 months. We announced about a month ago a partnership with Wilshire where we're bringing those managed portfolios to market. So we could talk about that more. But that's sort of been the journey where it's like individual offerings, maybe portfolio offerings, maybe a strategy, but still not able to get broad diversified exposure to alts in one shot.

And that's where things are going to go over the next 10 years.

Interesting. Nelson, should I stock pick or try to build a portfolio somewhere? I think you picked, you said it yourself, right? Stock pickers. There are no shortage of people today who decide to go all in on a single stock because they have such a high belief in that stock and that's what they like to do. Right. And there are people who said, I don't want to look at this. I want someone to manage this. And then this is my general thesis on how I think the market's going to go have at it. So it really is creating and providing an option.

for every flavor of investor in the market. And I think we'd be remiss if we didn't give them that optionality because there are just different people that want different things, different people that have different risk threshold and risk tolerances. And so you have to meet them where they are, right? And so what Michael was mentioning around like individual deals and then going toward package deals and going towards something that's much more institutional, like that has played out consistently throughout. And the good news is alternatives have been around long enough at this point to see and be able to go through that type of cycle.

So it's been good, right? I think investors these days have more options than ever before on doing this and what they can do here. I will say that having seen sort of the market evolve over the last few years and having such a diverse set of asset classes on our platform as well, we have people that, for example, during peak COVID, they only chose to invest in e -commerce financing and mobile app game financing and very things that things that were just specific to do well during COVID, right? When everything was shut down, everyone was at home.

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And then now you have a lot more variety. You have a lot of people saying, you know what, I actually can go across. I like the prospects of growth in Latin America more than the United States. And so go for it, right? Have at it. But we have no shortage of investors who have also come back and said, I really have no idea exactly which deal is better than the others. But I do know that same way as ETFs tend to do well across the board, it won't be better than one individual stock that absolutely crushes it. But you diversify, you mitigate risk, you do all these different things.

So providing them with some sort of managed product is extremely helpful. And we also, again, to the concept of meeting investors where they are, create the option for qualified purchasers to be able to actually tell us what they want in a product, right? And I think this kind of bespoke customization is going to what you see for some of these higher net worth investors, because they have a lot more sophistication, they have a lot more understanding, and they just know what they want, or they even have a mandate they have to adhere to, and they're not gonna be able to be a cookie cutter solution for them. You have to make that solution for them.

And so being able to do that makes it a very compelling opportunity that gets them exactly what they want, the way they want it. And they're very happy with the result coming out of that. So it's really meet investors where they are. And there are a whole slew of types of investors out there. And so just make sure you have something for everybody. So, Howard, let's get your take on this stock picking versus portfolio building issue. Maybe you could touch on your asset classes, particularly challenging to access, right? In a meaningful way. And so a lot of people come asking us,

How do I invest in an index of venture? But from what I have seen, that doesn't really exist. So just kind of, does that exist? How should people operate? And what's your field? Yeah, that doesn't exist. But I think I would say until now, I think we just recently launched an investible index. It's meant to be replicated by an index fund, right? I think everybody has said what I wanted to say in terms of whether you want to be a stock pick.

picker or whether you want to just outsource your investment or you want to just buy into a low cost fund is kind of up to your own risk and return appetite. And we certainly have that platform to allow people to express their views through single names. You can actually do that. But if we kind of take a step back and sort of think about providing the different types of options as it relates to late stage growth equity, I think what is really missing, particularly for individual investors and accrediting investors that are audience is this idea about a

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diversified basket of exposure that forms the core allocation of your portfolio. If you think about public equity investors, I'm not saying everybody is the same, but you typically think about is that you want diversification, you buy an S &P 500, you want a large cap exposure, you buy S &P 500 index funds, for example. You trade maybe on the margin on top of that as an overlay, if you're really alpha seeking to kind of up -weight, down -weight certain names that you actually want to generate alpha from.

If you want small -cap exposure, you buy Russell 2000. When it comes to our asset class, which is actually, there's a pretty big breadth of names. There's about 300 names that we actually have data on that actually formed the investable universe. But there is no S &P 500 equivalent that is investable, that is rule -based. What are the names? What are the weights for the private market, for the private equity space? So I think that is actually particularly missing. And when you actually have that, you're going to see...

going to start to see passive investing becoming kind of like a theme because passive investing and venture seems to be kind of like don't go together those two things but we actually think it should go together because when you look at the public market over 50 percent of the asset actually is being held passively so that's kind of like how we think about it.

Very interesting. All right, we're halfway there. So let's turn up the heat a little bit, put these guys in the hot seat. So, you know, hundreds of investors signed up for this event, but let's pretend you and one investor in an elevator, 60 seconds. Why is your product the best approach to providing access to private markets? Tell me why you're awesome. Why don't we start with Nelson on this one? All right. So I will be very clear and say that.

we don't provide access to all of private markets. We are specifically for private credit. And I think we've made a name for ourselves in that space. And I think it honestly makes it easier for investors to grapple with it, right? Like if they're looking for equities or secondaries or whatever, they can go to Forge. They're looking for a bunch of different options. They can go to Yieldstreet by all means, like have a look around, right? Like for sure, because again, we've spoken a lot about diversification on here and we are here to provide you diversification into private credit as one option, basically, right? But.

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Because we are singularly focused, that also makes us probably domain experts in what we do, right? So we provide all the tooling, all the research opportunities, all the education, and all the transparency that's required to be able to actually get your exposure into private credit the way you want it to. So from our perspective, at least, between transparency around underlying asset performance, transparency around how the order books are being built and sort of why things are priced the way they are.

transparency around why things are structured the way they are across multiple different deals. These are very private credit specific things that we've learned how to do over the course of five and a half years of doing deals, 650 transactions, well over a billion dollars of actual flow. These are the tools that we've created that gives investors the most power they possibly have to be able to invest in private credit the way they want to and the way that they think is suitable for their own risk tolerance with as much optionality as possible based on product, on yield.

on geography, all these different things. So I think being a domain expert or a sector specific marketplace in this instance works out well in your favor, but by all means, like, you know, I'm not going to be sitting here and give you startup equity. This is not happening. So look elsewhere for that. But we can definitely help you on the private credit side.

Michael, give me a sell. Not going to be as nice as Nelson. I think you framed it as a killer be killed moment. So jokes aside, when I think about Yieldstreet, we're not in the business of selling you a deal. That's not what we do. That's not why we exist. We're in a business because we believe that 30 plus percent of your portfolio should be healthy and diversified in alternative investments. We have done about $6 billion.

in investing on behalf of our clients. We did more last year than Nelson did in the last six years. We leverage that scale to get partnerships with the biggest platforms out there, the ARIES of the world, the Fortresses of the world, et cetera. We're giving you exposure and we're leveraging the size of our audience, the size of our customer base, to some of the best managers and the biggest managers out there. What we will do is help you deliver that diversified portfolio the way that's best for you. So there's three ways you do that.

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You can come and pick from a variety of investments and build a diversified portfolio on your own. Two, you can tell us a little bit about yourself and we'll make recommendations of what we think is a good portfolio. Or three, we'll offer you a managed portfolio solution. You can tell us a little bit about you. We'll get to know your risk tolerance. You decide how much you're comfortable with and we'll diversify it for you right away. So I think our size, our scale, our resources, our track record will help you seamlessly.

build a portfolio and it's not just about getting you to build it, but it's that ongoing reporting, that ongoing reinvestment, that ongoing management that separates us from really the rest of the industry. Cross the board. Cool. Howie, your turn. Yeah, so I think for Forge, it already has a track record of providing access to access to this particular asset class, particularly in the single name space, right? When you think about the rest of the sort of venture late stage platform,

We are the biggest, we have the most liquidity, the most breadth of offering, and we are the only one that is publicly traded. So I think it kind of went through the testament of being a publicly traded company. So with that, we have a lot of our safeguard in place. That said, if the question is about going looking forward, like from a new product, and what am I most exciting about is kind of like what I talk about, this investible index.

because not only we created an index of 60 names, just like a traditional equity index, we actually licensed that index recently to an asset manager called Acquidity. They launched a fund to provide access to this particular asset class. And what I'm most excited about is that for the first time, you are actually seeing the ability to provide rules -based, and index is rules -based, transparent and low cost. These funds are like...

2%, 1 % to 2%, they typically don't have a 20 % carry. So I actually think that is most exciting and it's very differentiating product offering that you're going to continue to see from our platform.

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Great, those pictures were great. So now I got off the elevator, I made a little note on my iPhone, head into my meeting. Tonight I'm gonna sit down at my computer and start researching. So how do I do that? You got me interested, now I'm browsing, I'm on your site. What questions should I be asking? What kind of diligence should I perform? Should I be looking at five other competitors to match the fees? How do I figure out whether I wanna do this now that I got that initial hook?

Why don't we start with Michael on this one.

Different strokes for different folks. There isn't going to be a one size fits all. The way we think about it is, first of all, yes, you should do all the diligence and spend as much time reviewing each platform, their offerings as you need to to get comfortable. The way we approach it is our view is that different people consume content and experience learning in different ways.

And so if you were to go onto the platform, there are different ways that you could explore. There's a macro, so you can learn a lot about the platform, the business, the team members, for example, our CIO, Ted Yarbrough, was at Citi for 30 years, managed $100 billion. And you'll learn about each asset class head and what they provide. Then there's the micro. You look at an individual opportunity. You click on an opportunity, and the first thing you'll see is...

much more of sort of a modern approach to how people consume data. Infographics, multimedia, maybe a webinar on the opportunity, bullet points, et cetera. For those of us who are much more of a sort of deeper dive diligence folks, you'll get a credit memo that would be the same that you would experience at a private credit fund or at a large asset manager that might be 40 or 50 pages. If you want to go further, there's your PPM, there's your sub docs, et cetera.

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So the way we've thought about the experience is least lift up front and then continue to offer deeper and deeper transparency for those who want it. Secondarily, it's a client -based asset -based conversation. So for certain clients, you'll have access to our IR teams. We generally respond to folks within 24 hours. They'll take whatever questions you have. It could be simple about how do we sign up? How do I use my IRA? We've got massive growth in self -directed IRAs.

using those funds for all. So it could be simple stuff like that. You can get a call with the private client team at a certain level. You can try and speak to the asset management team of a specific asset class if that's what's interesting to you. So in summary, the way we've designed the platform is to really obsess over the user journey, to take the learnings from the half a million members on our platform and create that journey that we think most folks want to be on. But we also have made the resources available.

really cater to you wherever you are in sort of your own journey and how you do diligence. That's how we approach it.

Gotcha. Nelson, how should I start my research? Yeah, I think I need to spend some kind of business. No, of course. Look, at the end of the day, I think track record speaks for itself. Right. Like I think that's and that is indicative of how a platform, any one of ours views risk management, how we view what we deliver for investors, things like that. And so even for us, right, the last 24 months, we've delivered net of chargeoffs, defaults, all those different things. And it went from 14 to 15 .1 percent returns to investors.

if they invested in every single deal that came out to market. So that's our track record. I would put that up against anybody else's, I think in the private credit space and even the alt space as a whole. And so that says a lot. I think beyond that, you have to really understand these platforms themselves, because all of us are very, very different. So Google them. And I'm not talking about looking at those. I know, Vincent, you guys do a great job. So I will toot your horn there. But there's other platforms that do these aggregators and reviews and things like that. And those are oftentimes sometimes done with the company's, you know,

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or look through it, looking at it, right? And like revising and things like that. Go deep and go into the forums, see what people are saying about these platforms, right? Like how do these platforms handle times of challenges more than anything else? Like have they gotten into trouble with regulators? All those different things are things that you want to look at to make sure that you're comfortable with the investment you're going into, because how they did in the past is also indicative of how they're gonna do in the future as well. So these are things to keep in mind. But I think for us, private markets in general are super opaque. That's kind of sort of why they're private essentially.

And so the reality is if the platform itself can provide a lot of transparency around how things are done underneath the covers, around the actual performance of the assets on an ongoing basis, have they paid out things on a consistent basis as they promised? Like look at what they've done historically and use that as your best judgment. So that's been what we've been trying to do and what we stand for as a company to be as transparent as possible. And I think investors have appreciated that over the years. So.

That's just the way that we do it. But again, it's very investor specific, right? Going back to that stock picker thing. Like there will be people that just throw caution to the wind and just invest in one thing that they like and they love it. And it does extremely well, but also can go to zero. But that's, you know, that's their choice when they went into it or they want the managed products. And then I think all of us offer managed products in some way, shape or form. So there's a lot of information. I think all of us have tried to provide as much education as possible because alts historically have been so opaque. So it's just, it's a general broad brush approach towards looking at.

everything around the platform, the deals, and how the companies themselves operate.

So Howie, let's put this one to you. I was on Forge browsing SpaceX, texted Elon asking to send me the last months of financials and the board deck, but he didn't respond. So how do I do my diligence on these? Yeah, I don't think Elon's going to respond to your text, especially in the secondary market. So I think the one thing to sort of remember is that,

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that there is going to be some information and data bifurcation depending on your primary investors, and you wish you have access to the data room, or you are mostly a secondary investors in this case. So having said that, knowing that difference is important, knowing that you are not going to get financials on every single deal. So you have to be comfortable with that. But without the financial, there are a lot of other data points that actually can help you make your investment decisions. So you go through your signup flow.

I think Nelson and Michael say a lot about that. I think the platform speaks for itself. It's been around for a really long time. So experience and signup process, I think is pretty intuitive. What I would say though is back to sort of like your data point, Eric, I think, you know, when it comes to the availability of data. So what we have done so far is that couple of things. One is that when you think about market -based pricing information, so like how much is SpaceX, use your SpaceX example.

How much is SpaceX actually trading now? How's SpaceX been trading relative to a basket of stocks, relative to its sector? I think what Forge has done in the last, call it two, three years, actually is really leaning to our own data set because we are big and we have a lot of transactions. So we can actually create a lot of insights and data based on our transactions. We're not aggregating data as some other data platform. So that is actually pretty informative.

and unique. So I would encourage people to check that out, leaving into the data offering that we have. Yeah. Got it. So I'm going to jump to the audience questions. It's hard to believe we're 45 minutes in already. So we're going to go to the Q &A. Anybody has additional questions that haven't already been dropped in here, please drop questions in on the Q &A right now. We've got a number though. Let me pick one up. So Matthew says, amazing dialogue thus far. How should investors think about diversification within ALT and managing liquidity needs? So.

just framing that a little bit. I mean, we haven't talked much about liquidity, but when I'm investing in SpaceX or whatever, you know, pre IPO company, my money's gonna be tied up for three years, 15 years, something in there. How do I manage that as an individual who's not, you know, sitting back on this massive endowment? And, you know, he mentioned diversification as well. So I don't know if there's a tie between those two. Why don't we start with Howie on this one.

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Yeah, I think specifically for our asset class, liquidity is a very interesting word for us because the index we actually launch is actually picking the 75 or 60 most liquid names that we actually see on the platform. So we actually do lean into this idea about being able to access liquidity because when you think about, for example, SpaceX, individual investors can't participate in a primary round in which usually that's tied up your liquidity for longer. But

The secondary market is actually a place to solve the liquidity problem. You potentially can trade in and out much more frequently, right? So whether you're buying whole or you are actually just, you know, forming a view on the trade, you're just, or theme, you would just want to trade in and out, is actually a good place to source liquidity from the secondary market. Yeah.

Nelson. Yeah, I think private credit historically very illiquid, right? Just in general, there is access to individual deals that inherently have shorter duration. So for example, factoring invoices that has like a 90 day maturity, if you really want to kind of play it that way. So you'd get inherent liquidity that way. But percent, we got found when we were founded, we knew that liquidity is going to be very important for a specific audience, which is retail credit investors. Right. So even though maturities are long in credit, especially if you invest in a fund, for example, it's like a multi -year.

We created structures that inherently allow investors to get almost quasi liquidity because the borrowers themselves oftentimes want to refinance, want to go back out to market, raise more money, drop their cost of capital. And so when that happens, investors have the ability to say, do I want to roll this over in its entirety, partially or none at all? And that happens, that call option structure is built into pretty much all the deals that we have on the asset backside. And that happens within like two to three months. So even though it's not maturity liquid,

and those maturities are long, creating structures that are in favor and friendly to investors was core to what we wanted to do when we got started. And so investors have really appreciated that. I think we pioneered the one month product for all intents and purposes, which I wish we could still do, but I think things have changed a little bit since that timeframe. But still, these structures still have these call options built in that I think investors view very favorably because they can get in and out as they see fit over the course of several months. Michael Estle on liquidity.

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So the question was asked on an individual level, which I think is difficult as a panelist to respond to. We don't know who asked the question. We don't know their, his or her particular financial overall picture. So I think the best we could do is answer from a macro perspective. And I agree with both Howie and Nelson. I think there's an evolution happening in the industry, which is part of sort of the maturation process of private markets, much like,

Nelson expressed, when I think about building my own personal portfolio in Yieldstreet, I have more than, I'm going to say safely, 40 investments on the platform. And I think about one of the things I thought about is like, how do I build a rolling portfolio of maturities? So maybe my longest duration is a 10 -year, like really interesting private equity strategy, and my shortest duration is a 90 -day solution. And I'll build through the portfolio, six month, nine month, 12 month, 18, two year, three year, four year duration. So I know that throughout...

the period of my portfolio, I'm always going to have a liquidity event rolling forward and I can then at that time decide, do I want to reinvest it or do I want to use that liquidity for something else? That was sort of the earliest phase. The second gen was introducing products that had liquidity inherent in them. So whether that's a Fortiac fund or an Interval fund, where there's some sort of quarterly liquidity component to those vehicles. The third was creating liquidity features.

within the offerings we had. So, hey, you could get early liquidity starting this period of time. And the final stage is really launching a full blown secondary market, which we intend to do in the fourth quarter. So the biggest challenge to making liquidity available and scale was a couple of components. One is the regulatory components. You need a broker dealer and an ATS license. Then there's a technology component and a market making component. And then the third was like the supply and demand. Is there going to be enough supply and demand like Forge has in?

private shares to create an active market. At this point of our business, with the scale of our business, the hundreds of open offerings at any given time that we're actively managing across all the asset classes, we felt it's the right time to really start to introduce liquidity at scale. So I think you'll see that happen, not just from Mule Street, you'll see that more broadly in the industry that liquidity is going to be introduced into private markets overall. To answer the specific question,

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We focus on a particular audience and a particular customer. I think probably between the three of us, there's some overlap, maybe not necessarily exact. The answer to your specific situation on liquidity would depend on sort of who you are and the type of profile and what your financial picture is.

I heard AI in the platform or in our market was how we use, I think that was the question. So we have viewed AI in a very interesting fashion, I guess. So the use cases internally are definitely there, right? We have become significantly more efficient on all the things that you'd expect, whether it's marketing, whether it's a little bit of engineering, whether it's...

taking a look at large data sets and large documents and just being better at that. So AI today, as it exists today, is fantastic for when you have a finite data set, trying to crunch it, make sense of it, and then action it. When it comes to things that you'd hope it can do, like better underwriting, better analysis of all these performances in the past, things like that, we have tested a lot of them. We haven't gotten comfortable enough with it that we would actually want to release it to investors because we're not liking the results that we're seeing. So...

We've been very cautious about doing this. And I think there's a time and a place for this, but all of us play in a regulated industry. We're very careful whenever something comes across as advice, whenever something comes across as a suggestion, like all of that is just very, very tricky. And so it's been a, be, I think optimistic of what AI can become for the industry of alternatives, but also be wary of believing too much into the hype and letting it dominate what you do today. At the end of the day,

All of us have built great businesses in their own rights. And if you build a great business on a standalone basis, AI should only help you and augment you, but it's not the defining characteristic of what we do today as a company. Gotcha. Howie, what about you guys with AI, other than all the investment excitement it's probably fueling for your companies? Yeah, so I think we're no different. First of all, AI is such a buzzword. I think we know that. But I think...

But when it comes to sort of like to Nelson's point, so there are a few different use cases because we have both the regulated business and the unregulated business and Fortridge data businesses not under the broker dealer arm, financial products. So things like improving efficiencies workflows internally and also for the platform users, you know, a better speed in terms of matching your IOIs in terms of matching your buys and sell orders and stuff like that. That's all sort of like workflow improvement.

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But I think if I just look forward, what we are really super excited about is kind of like using AI in portfolio construction or index construction. Think about like a lot of the things that we're dealing with here in the secondary market to your earlier point about SpaceX and financials, you don't have financials information. So for example, simple, simple things like sector classification, industry classification, we cannot do it by the traditional finance way, the Dix way, looking at revenue and put things into the different sectors.

AI is the perfect thing to do that because you're actually reading unstructured data. So we are super excited about innovation on that front, in addition to all the operational efficiency stuff that we talked about.

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Michael. Yeah, so we are. We are having so much fun with AI, so I'll give you like a few cool examples. First of all, I am like the biggest. Cheerleader, but also the biggest fetcher at Yield Street. So because I have 40 plus investments, I'm the guy who calls up and says this is so cool, like great job or 2 o 'clock in the morning. Like come on, that experience could be better. So one of the things I tasked the team was to find a resource that would help us sort of be like that annoying.

Buzzy B around the organization to learn all the different things that are doing and try to figure out what AI tools are in the market to help. And I'll give you a few examples of where we've had a lot of fun and some like pretty, pretty impactful things, specifically when it comes to like just broadly customer journey, customer success. So one is it became really important to us to be able to answer our customers within 24 hours. And at the scale of the organization, that's not always so easy. So now there are AI tools together with our chat bot.

that really understand how to respond to most of the questions that come in from users. So a lot of times your customer success team is going to be bogged down by a host of questions that are a little more generic in nature. So that's been amazing. Then let's go to like tech development. So a lot of the dev teams are able to use AI assisted coding tools, which are able to like super accelerate the production and the shipping of different code on a biweekly basis. So that's been really cool.

Then we take it up to the customer experience, the user journey. So I'll give you like the coolest one. We call it the galaxies. So basically we spent a lot of time today talking about, you know, let's say I spoke about you'll see in our thesis on diversification and you know, the way we think about things with 26 % of our customers, our oldest sort of longest customers have 11 or more investments across our platform, right? On active at any given time across portfolios.

So the question we think about is like, what's the right way, what's the right journey for you to experience Hill Street? What's that first, second, third, fifth investment you should make? So for example, if your first investment was a private credit offering, should the next one be private equity? If the first was a real estate offering, should we say, hey, it's great to be diversified, let's do something in art? And really trying to understand the human psyche behind that is really important.

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in helping customers feel comfortable about the experience they're having on Yieldstreet on the journey. So here's what the team did. The data team pulled like 450 or 500 individual investments in the platform's history and plotted it on a galaxy. So imagine like little white dots. If I had known this would be the question, I would show you the slide. It's super cool. And then it overlaid Michael's portfolio with colored dots. And so you would see each of the investments that I had made over time. It then scraped.

all of the verbiage and the data of how we positioned each of those offerings, looked at the current offerings and the pipeline that's coming on the platform, and made a prediction on what I would be most likely and most comfortable to invest in next. And what it really came down to was a combination of a nearest neighbor analysis, as well as what is Michael drawn to? So is it like, for example, two year senior debt?

monthly pay north of 11%. Like what's the framing and the verbiage that got me most comfortable? And then it had a prediction of what that investment would be. What happened, the data team asked for a meeting with me on a Thursday. They sent me this deck on a Tuesday. I did not review it before the meeting, but on Wednesday I happened to have in the ordinary course made an investment and I made the investment that the model predicted I would have made, which was like the sickest thing. And then we started to show it to different customers. So it's unbelievable.

how we're able to communicate and enhance the experience that our customers are having on Yieldstreet and help them build portfolios in a way that's most comfortable for them. The other one, which is transformational, is our managed portfolio solution that we did with Wilshire. So basically, you're coming online or asking you a series of questions. It's part suitability, part to understand who you are as a person. What's your risk profile? What's your duration? What liquidity needs do you have? And then based on that, we recommend the right managed portfolio for you.

And then on the other side of that, we have to figure out what's going into that portfolio on an automated basis so we could rebalance it, keep it diversified, keep it healthy, keep it performing. That is all done through the AI where every offering is coming in, being rated and weighted based on who the investor audience is. So we've had a lot of fun with using it. Not everything works. A lot of these projects you find like you could do better with regular code or it's really just statistics, enhanced statistics.

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But there's some things that are just absolutely unbelievable. And I'm like, I'm loving it. I'm here for it. That's awesome. We're right up against the end here. I want to squeeze one more question in, give us a 30 second answer. What's coming next? We got, we got election on the horizon. We got rate cuts, maybe. What do you see happen in the next six months? Nelson, you want to jump on that one?

Yeah, for sure. I think historically you've seen that election years are very volatile from a public market standpoint and tends to be up usually the year after because of just some sort of sense of understanding of stability that, okay, this is going to be set. This is what it's going to be for the next few years. So that in general should bode well for, I think, alternatives as a whole. I think Fed's dropping rates, which is likely going to happen at some point in probably Q4 of this year, read my best guess. You'll see something I think good happen out of that as well. Right. And so for us in particular,

It's going to be an interesting, I would say, year and a half just in general, but we're kind of heads down, stay the course, just continue to provide diversification and optionality for investors across the asset class that we think we like, that we think are going to perform well. But a lower rate environment in general will help with performance of these underlying assets across the board as companies start to feel the relief from being in a very high rate environment for a very long time. So it should bode well for private credit as a whole.

Howie, any predictions? We're going to have to finish up with you here. Yeah, so no, I think things are going to be choppy because of election year end rates like Nelson was talking about. So I think who knows what's going to happen? The IPO market probably is not going to go gangbusters this year on the one side of the equation. But I would say if you think about where we are at in terms of our particular asset class, this late stage investing.

we are still resetting. We still have a valuation overhang. Things are still trading at close to 50 % discount to last primary race. So when you think about marrying sort of like a diversified approach and get into this market, this is actually the time to buy low sell high despite this very choppy macro environment in the next six to 12 months. Got it. Michael, any closing thought here? Geopolitical risk is my biggest concern. I think we know how the market performed.

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whether it's a Trump or a Biden era, we've seen both of them be presidents. Geopolitical risk is my biggest concern. I would agree with Howie, tremendous amount of opportunities, still a lot of mispriced assets in the market is a good opportunity across the sector, whether it's private credit or real estate or other assets, secondaries, I think there's a great opportunity. You're going to continue to see massive adoption in alternatives, and you're going to continue to see a lot of volatility in the public markets. I think it's an opportunity to...

to be more comfortable with investing. I'm not a big sort of believer that there's a recession coming. I think it's just choppiness is sort of what we, it's the new normal for us, that vol. So keep investing, keep diversified, take advantage of the cheaper opportunity and try to create an environment for yourself where you're shielded from that volatility. And I think ALTS is the right way to do that. So whoever you choose, any of us, Blackstone, whatever, it's all good, but get diversified and buckle up.

So we broke our rule and went three minutes over, but we had a super high energy conversation. Thanks to the panelists for sharing your candid thoughts. Thanks to everybody attending for your time and we'll see you at the next event in our series. Have a great day.

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