Low interest rates have resulted in investors looking further afield for fixed income style returns. Traditional domestic high grade corporate debt no longer provides the yield cushion it once did.

Concurrently, as a result of increased regulation and the Global Financial Crisis, traditional banking institutions have stepped away from lending to certain areas of the credit market. As a result, new non-bank entrants have entered the market to lend to these sub asset classes. These new entrants have generally delivered higher yields than traditional fixed income with generally reduced liquidity.

The risks are higher within private loan investing. The major risk is that of increased unexpected loan defaults.  The risk of default generally comes from idiosyncratic or macro risk factors. We therefore believe that as an investor, when considering an investment in Alternative Income, one should be diversified across sub asset classes and across geography to mitigate and minimise these risk exposures.

1 Income means adjusted gross income, as reported for federal income tax purposes, increased by the following amounts: (i) the amount of any tax exempt interest income received; (ii) the amount of losses claimed as a limited partner in a limited partnership; (iii) any deduction claimed for depletion; (iv) amounts contributed to an IRA or Keogh retirement plan; (v) alimony paid; and (vi) any amount by which income from long-term capital gains has been reduced in arriving at adjusted gross income pursuant to the provisions of Section 1202 of the Internal Revenue Code.

2 Net Worth is the amount by which your total assets at fair market value exceed your total liabilities, with the following adjustments:

(i) the estimated fair market value of your primary residence is excluded from your total assets; (ii) the amount of any indebtedness secured by your primary residence up to the fair market value of such residence is not treated as a liability; (iii) the amount of any indebtedness secured by your primary residence that exceeds the fair market value of your primary residence is treated as a liability; and (iv) the amount of any debt secured by your primary residence incurred during the 60 days immediately preceding your purchase of any securities of the Company is treated as a liability (even if the estimated fair market value of your primary residence exceeds the aggregate amount of indebtedness secured by such primary residence), unless such debt resulted from the purchase of your primary residence during such 60 day period.

About Alternative Income

The specialty lending market has grown in prominence following the financial crisis and as a result of increased regulation.  This has imposed restrictions on certain types of lending by banks to both consumers and small businesses.

Low interest rates have resulted in investors looking further afield for fixed income style returns. Traditional domestic high grade corporate debt no longer provides the yield cushion it once did.

Concurrently, as a result of increased regulation and the Global Financial Crisis, traditional banking institutions have stepped away from lending to certain areas of the credit market. As a result, new non-bank entrants have entered the market to lend to these sub asset classes. These new entrants have generally delivered higher yields than traditional fixed income with generally reduced liquidity.

The risks are higher within private loan investing. The major risk is that of increased unexpected loan defaults.  The risk of default generally comes from idiosyncratic or macro risk factors. We therefore believe that as an investor, when considering an investment in Alternative Income, one should be diversified across sub asset classes and across geography to mitigate and minimise these risk exposures.

Sub Asset Classes in Alternative Income

Divorce Financing

As an investor in a trade finance transaction one receives a return for financing the transport of goods from a seller in one jurisdiction to a purchaser in another.

Trade Finance

Lending to small businesses gives investors the opportunity to replace the banks in a market that was previously dominated by traditional institutions.

Alternative Mortgages

Capturing the return stream in this asset class is a variant of traditional lending that banks undertake everyday with our deposits.

Life Insurance

Providing much needed capital to an area of the market and in doing so receiving a return not correlated to traditional fixed income