Structured products attract new investors 

As the investment landscape evolves, traditional assets such as stocks, bonds and cash are no longer the only attractive options. 

Investors are increasingly looking to diversify their portfolios with alternative assets such as cryptocurrencies, notes and collectibles. 

This is according to the Standard Bank head of global markets retail investments Nivedna Maharaj and specialist for solutioning Kevin Swartz. “This year, the total issuance of retail structured products in South Africa is projected to continue its upward trend,” they said. 

They asserted that this shift in focus, particularly among South African retail investors, is driven by a desire to tap into assets that offer a better risk-to-return profile and greater resilience in the face of economic volatility. 

Maharaj and Swartz highlighted the role structured products are playing in the diversification strategy of investors. 

Structured products are described as investment vehicles that derive their returns based on the performance of an underlying asset. These assets can range from equities and interest rates to commodities, currencies and property markets. 

In their explanation, what distinguishes structured products from more traditional investments is their flexibility. Returns and risk levels are predefined, and the payoff profiles can be customised to suit market conditions. “Overall, structured products can enhance a portfolio by  
providing tailored solutions that address specific investment needs, offering potential for higher returns, and managing risk effectively. 

“Last year we observed a global move from central banks towards gradual easing of interest rates. This trend played a key role in motivating retail investors to look for more value in their investments. In that spirit and given their derived value, structured products became a naturally attractive option.” 

Maharaj and Swartz both agree that structured products are becoming more mainstream, particularly as they become more accessible. 

“Despite being relatively niche, structured products are becoming more mainstream with increasing accessibility being provided by product manufacturers to advisory networks and platforms.  

“In our own observation, businesses that offer structured products such as Standard Bank Global Markets’ note programme have grown exponentially over the last 3 years. This business now represents a R120-billion issued notes business.” 

They believe that moving through 2025, structured products will continue to play an important role in helping investors diversify their portfolios. 

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