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Structured products – A new way of investing

21 November 2016

Inaugural Annual Africa Structured Products & Alternative Investments Conference - November 2016.

Many investors mistakenly think of alternative investments (better known as Structured Products) as being only for ultra-high-net-worth individuals and institutions. However, due to a number of innovations and technology, Structured Products now come in a variety of easy to understand packages that are available to nearly all investors.

This week sees the highly anticipated and inaugural Structured Retail Products (SRP) conference in Johannesburg. SRP is a leading online resource for the global structured products community with coverage of retail, institutional and private banking markets. The three day conference will showcase local and international industry leaders who will debate and share thoughts on how the structured product industry is revolutionising the investment world and what we can expect going forward. http://www.structuredretailproducts.com

Structured products are likely to continue to become much more important especially for smaller private investors worried about the impact of volatile markets on their portfolios. Itransact, a leading South African Index Product Investment Platform is a sponsor of the event and a provider of a range of structured products for the everyday investor who can invest for as little as R20 000.

Simply put, most structured products are capital protected notes issued by banks, many of which are listed on the Johannesburg Stock Exchange and investment minimums start at as low as R20 000.

Key features

• Pre-packaged (off the shelf investment)
• Listed on the stock market (transparent & well regulated)
• Defined investment outcome (based on pre-arranged parameters)
• Passive investment strategy (algorithmic)
• Liquid (sell anytime the market is open)
• Fixed term (generally around 5 years)
• Low cost

Undoubtedly, much education is needed for investors when it comes to structured products and alternative investments as this will be a popular method of investing going forward.

For instance structured products can be used for investors who wish to;

• Counteract short term volatility
• Confidently invest in irrational markets
• Choose varying levels of protection to protect hard earned assets
• Access to some of the world’s leading economic zones
• Access to “hard to get to” high potential asset classes


As the industry leans more to technology and innovating methods of investing, so should the way investors think about investing and the various options available to do so. Financial technology (Fintech) is revolutionising the industry, including the way investors participate in alternative investing. Technology is redefining the way we bank, trade stocks, lend money, and invest in companies. Over the past decade, the financial services industry has changed considerably, creating new challenges but bringing new opportunities and structured products will play a very important part in reshaping the way we invest in an uncertain world.

 

 

Quick Polls

QUESTION

The South African authorities are hard at work to ensure the country is removed from the global Financial Action Task Force grey-list by February or June 2025. What do you think about their ongoing efforts?

ANSWER

But what about the BRICS?
Compliance burden remains, grey-list or not.
End-2025 exit is too optimistic.
Grey-list is the new normal.
Too little, too late.
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