When exploring alternative assets like private credit, it's important to assess risk levels effectively. At Altify, we believe that understanding risk can empower you to make more informed decisions, helping you balance potential returns with your personal risk tolerance.

Private market investments don't involve the day-to-day market fluctuations seen in stocks or crypto, but it still carries risks—primarily linked to the underlying borrower's ability to repay its debts.

We use a 1 to 5 point risk rating system to help you understand the potential risk associated with each investment. A 1-point rating reflects very low risk, with highly secure investments and minimal chances of default. As the ratings increase, so does the potential risk, with 5 points representing higher-risk investments that carry a significant chance of default, yet offer the possibility of higher returns. This simple system allows you to choose investments that align with your financial goals and risk tolerance.

Here's a simple guide to private credit risk ratings on the Altify platform, designed to give you clarity when navigating these investments.

1 - Very Low Risk


These are highly secure investments, usually backed by borrowers with excellent credit profiles. Legal protections and covenants are strong, making the risk of default extremely low. For those seeking stability and steady returns, this is a safe bet.

2 - Low Risk


Low-risk investments offer a bit more return potential while still being relatively safe. The borrowers are credible, though minor risks—such as industry-specific challenges—might arise. Overall, the risk of loss remains quite low.

3 - Moderate Risk


This is where risk and reward begin to balance. Moderate risk investments often feature borrowers with decent credit but some challenges, like market volatility or less secure collateral. These investments offer higher returns but come with the possibility of delayed or partial repayments.

4 - Moderate-to-High Risk


This level involves significant but manageable risk. Borrowers may operate in higher-risk sectors or have more uncertain credit profiles, increasing the chance of default. However, the return potential is more attractive, making these investments appealing for those seeking higher yields and comfortable with some uncertainty.

5 - Very High Risk


High-risk investments feature borrowers with weak financials or operating in volatile sectors. The chance of non-payment or default is considerable, but so are the potential rewards. These investments are best for those willing to accept more risk for the possibility of greater returns.

Understanding these risk levels can help you align your investment strategy with your financial goals. At Altify, we're here to guide you through the complexities of private credit so you can diversify your portfolio with confidence.

Disclaimer


The risk ratings mentioned above are determined by the Altify Investment Committee, which assesses each investment based on borrower credit profiles, sector stability, and legal protections in place.

These risk ratings are subject to change as market conditions and borrower circumstances evolve.

It's important to remember that no investment is without risk, and past performance is not a guarantee of future results.

Investors should carefully consider their own financial situation and risk tolerance before committing to any investment. Altify provides these risk ratings to guide your decision-making process, but they do not eliminate the potential for loss. Always consult with a financial adviser if you're unsure about your investment choices.