Sharesight is excited to introduce our very first Ask Me Anything (AMA) session in partnership with Stropro! (1 day only!)
Introducing our guest speaker Anto Joseph, CEO and Co-Founder of Stropro, an alternatives investment platform. Anto and his team help investors with opportunities which can provide capital preservation, enhance their income return or capitalise on emerging growth opportunities.
Stropro leverages a panel of global investment banks and alternative fund managers to provide curated opportunities in private debt, venture capital, private equity, cryptocurrency and structured investments. The global allocation to alternatives by ultra high net worth clients is 54% (KKR Global Macro Trends 2021). It is an asset class used to help boost portfolio diversification and can help achieve returns which are not dependent on a bull market. Stropro has been assisting Australian investors with a range of strategies that can provide returns regardless of the market cycle.
Anto will be LIVE online from 9-5 AEST on Thursday 21st July to answer any questions you may have about alternatives investing. This could include (but not limited to) questions relating to the below:
What are structured investments?
What are the different types of alternatives I should consider?
How do I generate positive returns in a bearish market using alternatives?
How can I capitalise on volatility with alternatives in my portfolio?
Are there any best practices for tax benefits with alternative investments?
Simply head to the Sharesight Community Forum on the day and post your question in this thread!
Stropro + Sharesight
The integration with Sharesight makes it easy to push multiple investment holdings in different asset classes from Stropro into a consolidated view within Sharesight. Easily view, track and report on your total portfolio performance!
A friendly reminder that Sharesight does not provide financial product advice. Please see our full disclaimer for further information.
What kind of advantages does investing in the alternative investments outlined with you guys have over say, ‘traditional’ investments like listed stocks or ETFs?
Our products are designed to provide investors with clarity on risk and return. Unlike investing in equities and ETFs directly some of the investment products we arrange (Structured Products) are designed to provide investors with fixed returns and significant downside protection to mitigate against market volatility. These investment vehicles are great for diversification and provide uncorrelated market exposure.
Adding onto what Anto said about our Structured Investment offering, we also offer a suite of Alternative Fund Managers.
Alternative investments typically have a limited correlation to the stock market and can improve portfolio returns and reduce portfolio risk.
Professional investors such as Family Offices, Endowments and Pension Funds have proven this with their high allocation to Alternatives such as Private Equity, Venture Capital and Private Credit. These Institutions have returned 8.8% to 12.4% returns over the past 20 years, at much lower volatility than pure equities. You can read more about this in this excellent report by KKR
Structured Investments are customised products typically issued by a global investment bank.
They are usually pre-packaged for an investor and can be ‘structured’ around the various components below.
Objective: Income, Growth, Capital Preservation
Exposure: Any listed asset class (Equities, ETFs, Commodities, Currencies)
Timeframe: 30 days - 5 years
Risk: Investors can build in levels of protection to navigate market downside. If investors have a growth outlook, they can build in leverage to increase their participation on the upside.
Structured Investments are a $10trn market globally and for many Australian investors access has been restricted until now.
I’m a layperson here, and have only trivially looked at structured products, but just in case it helps to provide a concrete example, my understanding is that this could be one such possible product:
Your Structured Product =
Bond (which returns $1000 after 5yrs)
+
Warrant/Call option on ASX (which returns a portion of any gains on the ASX index, or zero $ if the ASX fails to rise)
So at the end of 5yrs, your product would return either:
Downside = return of your $1000 capital (= the bond return + 0 return on the ASX)
Upside = $1000 + bonus of $X from the warrant/call option on the ASX gains
I assume they would of course be less the fee of the structured product. You’re obviously paying the fee for someone with the knowledge/experience of knowing what products to buy to generate the risk-reward profile that suits you.
Also, presumably, for them to fully explain where there might be a possible risk to your investment (eg. if you’ve bought a corporate bond, the risk of the company going belly up and you only getting 50% of your initial $1000 capital back).
Most structured products have a Bond + Option component - which essentially generates the payoff.
Some structured products purely have an combination of various options.
Firstly, regarding credit risk. It is important with structured products investors use strong tier 1 investment banks because ultimately the structured product is priced off their balance sheet. So investors take on the credit risk of the bank that issue the structured product.
Now back to your example… to get 100% capital protection, primarily depends on the funding cost of the option. Remember there is a cost of having an Option, so this cost needs to be factored into the final return on the product. Even if at maturity if the underlying asset doesn’t provide a return, the cost of having the option over the term, will eat into your initial capital outlay. Utilising large investment banks will reduce this cost considerably as they price options for large institutional clients.
As an example, at Stropro we have provided investors access to structured products which provide for capital protection between 70-85% of their initial capital and provide leveraged participation to the upside of the asset it is linked to. We did that recently on Cathie Wood’s ARK ETFs.
Conversely, you can create structured products that provide deep defensive barriers and a regular income stream. Some investors have asked for 30-40% downside protection on the ASX 200 and fixed rate of return above 7% p.a.
If you are looking to mitigate volatility, preserve capital or take a growth outlook - a structured product can be designed accordingly.
Hi @Jack_Sharesight yes - there are definitely tax benefits to be explored depending on the alternative investment.
In some Venture Capital funds where it has an ESCLVP qualification investors have the added benefit of an immediate tax offset and also exemptions from Capital Gains Tax within a certain period.
In some Structured Products, there are products that provide lump sum returns beyond 12 months which have CGT benefits rather than being treated as income. Some structured products can provide significant leveraged exposure to an listed asset, where investors then have the added outcome of tax deductible interest.
Happy to share some of these ideas if you would like to join at www.stropro.com