Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Structured product revival a sign of the times
Structured products made their way into investment markets a decade ago, but never really grew in popularity. As the name suggests, structured products are a combination of a stock, a bond, an index or a commodity such as gold or oil together with the use of one or more derivative instruments which creates specific payout and risk mitigation scenarios.
These products can be adapted to any market and tailored to personal investment objectives and requirements. In general, structured products were divided into four groups – with increasing return potential, but also increasing risk: 1. Protection, 2. Optimization, 3. Participation and 4. Leverage effect. They were mainly used by investment banks but slowly dwindled in popularity.
Today, structured products appear to be making a resurgence with volumes on the rise as investors tackle a low interest rate environment.
CEO and Co-Founder or StroPro, Anto Joseph, has developed an innovative investment platform specialising in distributed structured and alternative financial products to the masses and getting around the traditional investment banking gatekeepers.
Joseph says: “We launched Stropro to assist Australian investors access income strategies through an easy and transparent route. The Stropro platform provides alternative ways to generate income and access global opportunities, which were previously only available to private banking clients of big banks.
Stropro has secured a handful of top tier global investment banks including Societe Generale and Credit Suisse to help launch a range of products that can deliver a reliable yield consistently. The platform recently launched a Societe Generale product that is linked to the ASX 200 index paying a fixed return of 7% p.a.
Surprisingly, the structured investments market is no small market. It recently pushed past USD $7 trillion, which is larger than the global ETF market ($5.3 trillion) and Hedge Fund market ($2.9 trillion).
With interest rates sitting near zero, the only way investors can receive the same yield is via equities albeit climbing up the risk curve. This means these investors will now be exposed to equity market volatility leaving them open for capital losses should there be another market correction
Joseph says, “Even though we cannot predict future performance of the financial product, after back testing the strategy daily over 20 years it has never resulted in a capital loss. The ASX 200 linked investment has already received a tick of approval from many direct investors and family office clients. The feedback has been an appreciation for its ability to generate a return equivalent to high dividend paying stocks but simultaneously defend against a market correction.”
Ben Streater, Chief Product Officer for Stropro adds, “We are not surprised that the global structured investments market is surging. Last year a record USD $70 billion flowed into structured investments in the USA. Here in Australia, Stropro has improved access to structured investments by launching 25 strategies in our first 18 months. Our fixed return strategies have generated an average annualised return of 8.26% p.a. with no capital losses.”
One of the reasons Stropro entered this sector was to improve transparency and heighten investor experience within the industry. In 2020, the company offered investors the change to move across their structured investment holdings, free of charge, onto the platform.
“The Stropro experience is a streamlined digital journey that allows investors to access investments via their mobile or laptop and utilise comprehensive portfolio tools to manage their positions”, he says.
Since its launch Stropro has been recognised for revolutionising the way investors can access institutional investment opportunities.
