Fixed Income Investing
Fixed Income investments are income producing vehicles that are often utilized as an alternative to the volatility of the stock market. This strategy is frequently favored by those who are seeking a more conservative approach. Traditional fixed income includes Certificates of Deposit, US Treasuries, Municipal Bonds, Commercial Paper, and Corporate Bonds among others. These vary in their liquidity, term, and risk profiles, but are all typically sought out as lower risk options that provide a reliable stream of cash flow. Many investors utilize fixed income as a means to generate distributable earnings from their portfolio. However, in the current economic climate there is a lack of fixed income paying attractive returns. This leaves few options for investors and advisors who are seeking to generate monthly cash flow without significantly increasing the risk to their principal.
The WFP Income Fund, WFP Opportunity Fund, and individual trust deeds offered through Wilshire Finance Partners fill this void. These investments pay attractive returns while providing a consistent stream of cash flow and help protect the invested principal from downside risk. They are also short-term, fixed income alternatives that are non-correlated to the stock or bond markets.
Conventional thinking is that an aggressive investor who has the ability to withstand market cycles should remain heavily allocated in the stock market to maximize upside potential. Often times this strategy is better suited for younger investors who are in the asset accumulation phase of their life and/or careers. A more aggressive strategy may be well suited for this type of investor because he or she will relying on their employment earnings and not be reliant on their portfolio to generate distributable earnings to cover living expenses. Therefore, this investor may be better able to withstand swings in the market and will have time to rebound from down markets prior to having to rely on earnings from their portfolio.
Conventional thinking also maintains that a risk adverse investor or an individual who relies on their portfolio to produce distributable earnings should have a portfolio which has a lower allocation in the stock market and is more heavily weighted in fixed income. Historically, this asset allocation strategy has been generally effective and investors have earned acceptable returns. However, today that traditional fixed income model is paying significantly lower returns than investors are used to receiving. As a result many investors are not generating the desired cash flow from their fixed income portfolio allocations. The lack of viable cash flow producing options has caused some investors who have generally been more conservative in the past to reallocate their portfolios into higher risk investments order to generate higher returns despite being otherwise risk adverse or not in a position to take on the added risk.
Wilshire Finance Partners seeks to solve this problem. Wilshire’s conservative philosophy is designed to meet the criteria of a risk adverse investor, while delivering returns that are on par with expectations of investors seeking higher returns. Therefore, Wilshire’s offerings may provide the balance sought by many fixed income investors.
As described above, Wilshire offers investors several fixed income investments options; including, individual trust deeds, the WFP Income Fund, and the WFP Opportunity Fund. Each of those investments seek to provide:
- Volatility Hedge. Each of the investments avoids the market risk and volatility associated with the stocks, bonds and many other traditional fixed income investments.
- Consistent Cash Flow. Because the underlying investments are real estate secured loans with fixed payments, the investors are able to receive consistent cash flow.
- Principal Safeguards. Wilshire strives to deliver multiple safeguards to help protect the invested principal; including, conservative collateral-based underwriting; lower loan-to-value ratios; and portfolio diversification in its funds.
Like many fixed income strategies, Wilshire’s offerings do involve risk. However, as addressed above the Wilshire team employs multiple safeguards to help mitigate risk while striving to achieve attractive risk adjusted returns. We believe the result is a risk/return relationship that is extremely favorable.
Fixed Income remains an important part many portfolio allocation strategies, but unfortunately this asset class has underperformed. Wilshire offers an alternative strategy that helps investors achieve greater diversification and down-side risk protection with returns that have significantly outpaced the returns many traditional fixed income investments.
To learn more about the trust deed and fund investments offered through Wilshire, please contact us at (866) 575-5070 for a free, no-obligation consultation.
The information contained on this Website (the “Overview”) is not an offer to sell or the solicitation of an offer to purchase trust deed or mortgage investments, or the securities of the WFP Income Fund, the WFP Opportunity Fund or other securities or investments (individually and collectively, the “Investments”) offered through Wilshire Finance Partners, Inc. (“Wilshire”). The purpose of this Overview is to provide an overview of one or more Investments and its private placement. Persons interested in learning about one or more Investments and their private placement will be provided with the Private Placement Memorandum, Operating Agreement (as applicable), Subscription Agreement and other related documents (collectively and inclusive of exhibits and any supplements thereto, the “Memorandum”) prepared by Wilshire, which provides a description of the particular Investments, the terms of the private placement, a discussion of risk factors, and other information related to such Investments. To the extent that there is any inconsistency between the information provided in this Overview and the Memorandum, the Memorandum shall control. This Overview and the Memorandum contain certain forward-looking statements regarding the Investments. The forward-looking statements are based on current expectations that involve numerous risks and uncertainties which are difficult or impossible to predict accurately and many of which are beyond the control of Wilshire’s management, including, but not limited to, national and international economic conditions, changes in legislation, and other factors that can disrupt economic stability. Although Wilshire believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking statements will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements, the inclusion of such information should not be regarded as a representation by Wilshire, any placement agent, or any other person, that the respective objectives and strategies of investing in one or more Investments will be achieved. Investments be made solely by accredited investors (which for natural persons, are investors who meet certain minimum annual income or net worth threshold), who are provided with the Memorandum and who complete, execute and deliver the subscription documents included therein. The Investments are securities and each of the Investments are being offered in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Regulation D, Rule 506(c), and are not required to comply with specific disclosure requirements that apply to securities registered under the Securities Act. Neither the Securities Exchange Commission nor any state securities regulator or agency has passed upon the merits of or given its approval to the securities, the terms of either offering, or the accuracy or completeness of any offering materials. As securities offered in an exempt transaction, each of the Investments are subject to legal restrictions on transfer and resale and investors should not assume they will be able to resell the Investments. Past performance is not indicative of future results. The Investments involve substantial risk, including loss of investment, and is not suitable for all investors. Loans are made by Wilshire Finance Partners, Inc., Bureau of Real Estate Broker’s License number 01523207. Loans made by Wilshire Finance Partners, Inc. outside California will be made pursuant to licenses, authorizations or exemptions in each other state.