Views From The Experts
Don Pelgrim
CEO
Wilshire Finance Partners
Stable Income & Principal Protection In A Dynamic Interest Rate Environment
The July 2017 Beige Book by the Federal Reserve indicated economic activity continued to expand across all twelve Federal Reserve Districts. In addition, the majority of the Districts expected modest to moderate gains in the months ahead. This was good news for the economy, yet the Fed voted to keep interest rates flat.
Over the last decade fixed income investors had the challenge of generating higher yields and strong cash flow in a persistently low interest rate environment. Now, absent other geopolitical or economic changes, continued economic strength may lead to rate increases exposing some bond holders to new challenges.
Increasingly, alternative investments have gained greater utility in solutions-based portfolio strategies. Unfortunately, the sheer number of choices may have cluttered the landscape and a shift is occurring. Investors now demand more conservative strategies with strong fundamentals and repeatable results because they have a higher probability of weathering future challenges.
As the manager of the WFP Income Fund, our investment philosophy of delivering Stable Income & Principal Protection is realized through a portfolio of short-term first trust deeds and mortgages with lower loan-to-values secured by income producing property.
Real estate debt funds can deliver monthly cash flow from the interest earnings in the portfolio and deliver better risk-adjusted spreads relative to other short-term fixed income investments. Regarding risk, there is nothing like the warm blanket of protective equity to provide downside risk protection. Investing in a conservative, real estate-secured, senior debt fund may provide more safeguards than real estate equity or traditional fixed income investments.
As a result, a private debt fund can be positioned as a shortterm, fixed income alternative investment backed by a hard asset that produces higher cash flow and down-side risk protection.
Wilshire Finance Partners is a leading real estate-based investment firm focused on delivering Stable Income & Principal Protection™. Managed by Wilshire, the WFP Income Fund is a short-term fixed income alternative investment that delivers monthly cash flow and downside risk protection. Since the fund’s inception, the net asset value (NAV ) has remained stable and demonstrated no correlation to the securities markets and no sensitivity to changing interest rates. Please send questions to [email protected] call us at (866) 575-5070.