DiversyFund vs YieldStreet - Which is Better for You? (2021)
While both YieldStreet and DiversyFund are often mentioned together they’re not very similar at all and generally only one will be the right platform for you — if you simply want a bond-proxy or to invest in High-yield debt then Yieldstreet is a suitable choice, however personally we’re not a fan of such investments due to our belief that inflation is coming.
To be blunt: While we believe DiversyFund is a good eREIT platform that offers good expected returns, albeit with a lack of liquidity that publicly traded REIT’s offer, we don’t really see YieldStreet as even a decent investing platform, as you can find comparable yields and returns from publicly traded stocks and corporate debt, with less fees.
Because of that we’d say if you’re interested in an eREIT we’d recommend checking out our article comparing DiversyFund and Fundrise, which both are good choices in our opinion, and making your decision between the two of them based on the differences we outline in that article, however YieldStreet isn’t an equity eREIT platform so unless you just want to invest in fixed-rate debt they aren’t for you.
However you’re interested in fixed-rate yield, honestly we STILL wouldn’t recommend using YieldStreet as you can generate similar yield with similar risk simply by buying publicly traded, far more liquid, stocks in your brokerage account, or Fundrise which has lower fees, a better interface, and more diversification opportunities.
Which Platform Has Less Fees - DiversyFund or YieldStreet?
While fees aren’t the most important thing they’re generally the main deciding factor for most people when it comes to investing — In this case however we believe it’s more important to focus on overall return as well as the features and philosophy of each platform and what they have to offer.
However to get to the point — DiversyFund claims to be no-fee, and this is somewhat true as they don’t take any active fees every month or year — instead they opt to be a shared-owner in the investment and act as not only the manager of the property but also the property developer — and in return they take an equity stake of around 2% -> 8% in the properties they acquire — meaning in the 5-year vested period (more on this later) their fees are only 2% -> 8% of your invested capital depending on the project, generally around 3.5%.
On the other hand, YieldStreet has varied fees, generally between 1.5% and 3% per year (annually) every year — which comes out to 7.5% -> 15% in the same time period as Diversyfund would take their 2% -> 8%, which sounds quite horrible if you ask me — but hey as we said above, fees aren’t what matters: total return is what matters — more on this later in the article (spoiler: DiversyFund blows YieldStreet out of the water in that regard as well).
Which Platform has Better Sign-Up Offers - DiversyFund or YieldStreet?
Currently neither DiversyFund or YieldStreet appear to offer anything great in terms of sign-up offers — YieldStreet doesn’t offer any sign-up promotions from what we’ve seen and DiversyFund usually doesn’t offer any but it never hurts to check their website to see if they have recently came out with one.
Which Platform has Better Diversification & Transparency?
We’d say both aren’t super transparent compared to other competitors like Fundrise, but between DiversyFund and YieldStreet we think DiversyFund is maybe a bit more transparent compared to YieldStreet, but ultimately not by a significant margin — As a result The main differentiating factor is that YieldStreet only has a few offerings available at one time or one fund (although it’s all under management while DiversyFund has dozens of properties in the fund already, making it much more diversified and stable in it’s performance.
If you’d like greater transparency than these platforms offer, which is more or less limited to property location, basic financials, and that’s it — then we’d recommend checking out Fundrise which is more transparent than either of these companies — or if it’s not a deciding factor for you and Diversification + maximum returns is, then DiversyFund is likely the better choice — but unfortunately in this category, as of 2021, YieldStreet isn’t a great choice if you want diversification or transparency.
Which Platform Offers the Best Overall Return - DiversyFund or YieldStreet?
There’s no way to spin this — DiversyFund absolutely destroys YieldStreet in terms of historic performance.
To elaborate, for the last few years DiversyFund smashed returns out of the park with 15%+ returns, while YieldStreet has only yielded a bit below 10% for the last few years, often lower sometimes a bit higher — this is due to their higher fees and focus on debt-based investing method rather than equity-investing, but there’s no disputing that YieldStreet has yielded much less than DiversyFund historically.
To put this all into perspective if you invest $10,000 for 10 years into DiversyFund you’d be looking at a sum of $45,520~ at the end of the 10 years, a whopping 4.5x return — while with Yieldstreet you’d only have $21,589~ after the same time period, assuming both of their historic returns remain the same.
Don’t get us wrong — Yieldstreet isn’t that bad investment just because DiversyFund returns so much more, they both keep up with the general broad market historically and with rewards generally comes risk, so theoretically this may mean Yieldstreet has less risk than DiversyFund — although we don’t really believe this to be the case.
Who is Better Off Investing with YieldStreet?
If you aren’t interested in residential property and want a bond-proxy to generate yield from debt then Yieldstreet isn’t a bad option — they seem to offer average -> above average yield from predominately debt-based investments. While we aren’t into this type of investment, if you’re retired and/or hedged to inflation then it’s not particularly bad, and might be right for you.
If you aren’t specifically interested in debt/fixed-income exposure then we don’t see a reason to go with YieldStreet over DiversyFund or Fundrise, both of which offer more diversified types of properties both in terms of geographical diversification and also property type, as well as higher historic returns and lower fees.
Who is Better Off Investing with DiversyFund?
Unless you’re interested in pure-play debt/fixed-income exposure then we don’t really see a reason to go with YieldStreet over DiversyFund, as pretty much in every single metric DiversyFund appears to be the better choice.
DiversyFund has lower fees, higher historic returns, better diversification, and in our opinion better selection of property locations and geographic exposure. As a result unless you specifically are looking for Office/Retail exposure then there’s not really a reason to opt for YieldStreet over DiversyFund.
YieldStreet & DiversyFund FAQ's:
Below we’ll answer the most popular questions we’ve been asked about the two platforms, or questions we personally had about them before we tried them both out ourselves — if you have any questions that aren’t answered below feel free to either email us or the companies their self to get those questions answered.
Does DiversyFund Pay Dividends?
While they used to not they now do pay dividends and offer a DRIP (Dividend re-investment Program) as well — so now just like Fundrise and other eREIT’s you can expect dividends every single month — assuming nothing catastrophic occurs that causes rent-delinquency’s to explode.
What are the terms for early-redemption (exits before the liquidation period) for YieldStreet and DiversyFund?
When it comes to DiversyFund it’s quite simple — there aren’t any. If you want to exit before the fund/property is liquidated after 3-5years+ you’ll have to do a fancy pancy private-equity deal with someone off-market, which just isn’t viable for 95%+ of people — so essentially there is no option to liquidate early on, which is quite problematic if you are in need of quick-cash.
As for YieldStreet there’s also no early redemptions, however there’s rumors they’ll allow their main fund to have early redemptions later this year, however this still has yet to be put into place.
Does YieldStreet or DiversyFund Use Debt/Mortgage’s With Their Properties?
Yes, we met with both DiversyFund and YieldStreet and discussed this very topic — DiversyFund uses a fractional debt when purchase deals — meaning that they take a portion of customers invested capital and use it as a ‘downpayment’ for a property, then finance the rest of the deal, generally around 35% -> 60% with debt and the rest of the property is paid for in cash, providing a healthy cash-flow right off the bat while at the same time providing a decent built-in inflation-hedge and low-risk leverage.
YieldStreet generally does not use debt to leverage as most of the deals on the platform are debt-based, as in you lend someone capital ($$) to invest or use at a fixed rate — however some of the companies that list offers on YieldStreet’s platform do use a similar debt/mortgage + your capital investing style, albeit quite rare since most deals are not equity-deals, and thus don’t qualify for such financing.