As U.S. stock markets have rocketed to stratospheric highs during the early part of 2017, most savvy investors believe the current bull market has reached a near term peak, and is due for a significant correction, or will trade sideways over the next 24-36 months.
Investors are now looking to take some chips off the equity table and move capital into less volatile investments – trading potential capital appreciation for the safety of consistent yield. But where to look? Conventional wisdom in yield based investing has long favored the REIT, with investors finding safety in large cap real estate investments. A REIT is indeed a sound choice for the yield investor, but are there better options? I believe there are.
American business prospects are experiencing renewed optimism in 2017, and as is always the case, small business will lead the way in driving new economic growth. How does the yield investor tap into this new growth engine? By looking for entrepreneurial yield investments.
Many American small businesses have great growth opportunities at hand, particularly those that operate in the “Trump zone” industries of construction, infrastructure, private education, real estate services, manufacturing and others. The problem is commercial banks are still M.I.A. when it comes to financing small business, even those with a favorable growth trajectory and provable revenue and profit. At Legion Financial Group, we believe in the power of small business, and we believe that small business finance is the key to maximizing return on investment.
Legion manages two high yield venture funds focused on growth companies – businesses with solid assets and market advantage, that still cannot access the capital they need from conventional banks. Our Select Venture Fund and our High Yield Mortgage Fund both invest in small business, real estate entrepreneurship and growth companies, and both have historically returned over 12% annually to investors with monthly cash distributions of 1% per month. By comparison, REIT stocks today yield 3.8%, and the yield of the S&P 500 is a meager 2.2%. (Kiplinger Report – June 2016)
For the yield investor, returns can be much greater in targeted smaller cap, entrepreneurial investments than in the larger cap REIT or similar investments. A savvy investor needs to tap into the current American small business renaissance by identifying those opportunities to leverage this economic growth and increase overall portfolio returns. The investor who relies on conventional REITs or other large cap investments to deliver that return could indeed be Looking for Yield in All the Wrong Places.
By: Jim Byrd
About the Author: Jim Byrd is the Chairman and CEO of Legion Financial Group, a venture capital and private fund manager. Legion manages the Legion Select Venture Fund and Legion High Yield Mortgage Fund. www.legionfinancialgroup.com
This is not an offer to sell, nor a solicitation to purchase any securities. Such an offer can only be made through duly executed offering and subscription documents. This Fund is for accredited investors only, and verification of accredited status is required. Past performance is not an indication or guarantee of future performance.