How To Diversify Your Portfolio With “Alternatives” – Structured Products Continue To Offer Viable Growth For Investors
Nivedna Maharaj, head of global market retail investment and Kevin Swartz, expert on standard banking solutions
Investor chat rooms and chatbots tell us that while the traditional single stock, bond and cash categories are still good investments, the financial assets the town talks about are “alternatives.”
These include a wide range of asset classes such as cryptocurrencies, notes and collectibles.
Investors are paying attention and are looking for the most influential investments that have the greatest value and are buying theme sectors that are tilting the trend list everywhere in 2025 (such as artificial intelligence) and others.
We have seen that South African retail investors are particularly keen to provide the best risk and return investments.
Why?
Because in the current climate, diversification has the potential to yield higher returns and certain alternative investments can also be used as a hedge against inflation, which is great for those who are particularly sensitive to market movements and performance volatility. Some alternatives may indicate lower volatility and a level of economic flexibility retail investors appreciate this.
It is this vigilance and attention that has led more retail investors to invest in alternative investments such as structured products.
Structured products are investments that provide returns based on asset performance. The asset can cover equity, index, funds, interest rates, currency, commodity or property markets. The return on investment and investment levels at risk can be predefined. Return profiles can be designed to take advantage of the rising, falling or scope of the market and delivered in a way that can be tailored to the needs of investors.
Structured products can play a variety of roles in the portfolio, providing unique returns and meeting specific investment needs such as risk management, enhanced yields, customization, revenue generation and tax efficiency.
Overall, structured products can enhance the portfolio by providing tailored solutions to specific investment needs, providing high yield potential and effectively managing risk.
Last year, we observed a global shift from central banks to gradually lower interest rates. There is no doubt that this trend plays a key role in inspiring retail investors to find more value in their investments. In this spirit and given its derivative value, structured products become a naturally attractive option.
This year, the total issuance of South Africa’s retail structured products is expected to continue its upward trend.
This growth is expected to be driven by investors’ demand for customized financial solutions, the continued decline in interest rate cycles and the demand for capital protection in a turbulent economic environment.
Despite its relative niche, structured products are becoming more mainstream, and product manufacturers provide accessibility to consulting networks and platforms.
In our own observations, businesses that offer structured products, such as the Standard Bank Global Market Programme, have grown exponentially over the past three years. The business now represents the R10 billion issuance business.
Our in-house retail customers access these solutions using a self-targeted channel, which has increased by more than 100% in two years. This is attributed to easy access and reduced entry barriers to minimum investment requirements.
We firmly believe that discerning investors in diversification will find friendly investments and benefit from investing in structured retail products.
Throughout our unique 162-year history, we have long been associated with unrivalled attention through customized advice and considerations.
We firmly believe that as a growing retail investor, we contribute to the growth of the wider society we operate, we call it “home.” We look forward to continuing this trend over the past decade and in the following years.
