Diversification, Income, & Liquidity
Credit Funds
REITs, or real estate investment trusts, are companies that combine the capital of many investors to acquire or invest in income-producing commercial real estate and related assets.
Why do experienced investors choose Credit Funds?
Individual investors frequently seek high yield strategies, but aim to mitigate potential downside risks of high yield investments such as defaults, drawdowns, and volatility. This alternative category has been expanding in size in the last decade, as the low interest rate environment drove investors to seek higher nominal yields. Today, investors have continued investing in the category in search of real yields (to mitigate the effect of today’s high inflation rate). However, this category has been historically limited to institutions because of large investment minimums.
Search for Meaningful Income and Attractive Risk-Adjusted Returns
Many clients seek investment categories that have demonstrated asymmetrical reward profiles: attractive total return with potential for lower volatility. Many investors believe that the alternative credit asset class fits this description: differentiated, alternative strategies that target equity-like total return potential and meaningful income while offering individuals access to investments typically only available to institutions.
Structured credit refers to specialized securities that pool certain debt obligations and subsequently provide access to a wide range of debt investors such as banks, insurance companies, and pension plans to participate in the debt ownership. This occurs through a securitization process in which the strategy’s investors are categorized by tranche depending on their return objective and risk tolerance, and receive cash flows in varying amounts depending on the tranche they selected.
Notable Advantages in Today’s Uncertain Market
Credit has minimal price sensitivity to rising interest rates, given its floating rate nature. This acts as a potential hedge to inflation, given that the interest rates adjust upwards as the Federal Reserve increases the Fed Funds rate.
Credit has higher income potential, especially when compared to equivalent yields for publicly available asset classes. Expected income generation metrics are significantly higher for credit securities than the rate for even high yield bonds.
Credit has a low correlation to broader markets. This is a characteristic that is especially important in today’s volatile and uncertain environment and where the traditional “60/40” portfolio has recently shown reduced ability to generate meaningful returns or in reducing risk.
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Work with Baker 1031 to gain the distinct advantage institutions have in real estate. We bridge the gap by partnering with leading players, giving you access to their opportunities. Diversify your portfolio, upgrade asset quality, eliminate management burdens, and secure attractive, non-recourse financing—all without sacrificing what matters most to individual investors.
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Receive due diligence materials upfront, transparent fees and expenses (with no hidden costs), audited financials, and verified Sponsor track records.
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Investment offerings with flexible holding periods, enhanced tax benefits, unique features, and numerous exit and reinvestment options.
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Benefit from 1031 Exchanges, depreciation, cost segregation, depletion allowances, interest expense deductions, and more.
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The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the Sponsor’s Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney.
There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potentially adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Because investor situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
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