Nivedna Maharaj
Kevin Swartz
Investor chat rooms and chatbots are telling us that while traditional categories of single stocks, bonds and cash are still good investments, the financial assets that are the talk of the town are “alternatives.”
These include a wide range of asset classes like crypto, notes and collectibles.
Investors are taking note and are looking for the most impactful investments that offer the greatest value for money and are buying into thematic sectors that are tipping trend lists everywhere in 2025 – such as Artificial Intelligence – and others.
We have seen particularly keen interest from South African retail investors in sourcing investments that offer best risk versus return profile.
Why?
Because in the current climate, diversification has the potential for higher returns, and certain alternative investments can also be used as a hedge against inflation which bodes well for those especially sensitive to market movements and fluctuations in performance. Some alternative options may demonstrate lower volatility, and a level of economic resilience retail investors appreciate.
It is that vigilance and attention that has led more retail investors towards alternative investments like structured products.
Structured products are investments which provide a return based on the performance of an asset. This asset can cover the equity, index, fund, interest rate, currency, commodity or property markets. The returns and levels of investment at risk can be pre-defined. Payoff profiles can be designed to take advantage of rising, falling or range bound markets, and delivered in a way that can be tailored to the needs of investors.
Structured products can play several roles in a portfolio, offering unique benefits and addressing specific investment needs like risk management, yield enhancement, customisation, income generation and tax efficiency.
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 undoubtedly 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.
This year, the total issuance of retail structured products in South Africa is projected to continue its upward trend.
This growth is expected to be driven by ongoing investor demand for customised financial solutions, a continued decline in interest rate cycles and the need for capital protection in a volatile economic environment.
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 program have grown exponentially over the last 3 years. This business now represents a R120 billion issued notes business.
Our internal retail clients using self-directed channels to access these solutions have increased by over 100% in two years. This is attributed to ease of access and reducing barriers to entry in minimum investment requirements.
We strongly believe that the discerning investor with a keen eye for diversification will find succour and benefit in investing in structured retail products.
Throughout the course of our unique 162-year history, we have long been associated with an unrivalled focus on growing our clients through bespoke advice and consideration.
We strongly believe that in growing retail investors, we contribute to growing the broader societies in which we operate and this continent we call home. We look forward to continuing this trend through the course of the decade and ensuing years ahead.
Nivedna Maharaj, Head of Global Markets Retail Investments and Kevin Swartz, Specialist for Solutioning at Standard Bank. They write in their personal capacity.
