George Lucas
The boutique fund manager Instreet Investment has raised more than $1 billion since its inception in 2007 following a solid June quarter this year for its own and third party structured products business.
Although these financial products have attracted less retail investor interest due to the falling number of independent financial advisors (IFAs) and a more prescriptive asset allocation model from financial planning dealer groups, there is stronger demand from wholesale/sophisticated investors, says Instreet Managing Director George Lucas.
Lucas says: “Wholesale investors still see the benefit of these products as a viable investment option to increase yields, gain exposure to alternative markets not readily available through existing managed investment products or to diversify and manage downside risks while maintaining upside exposure.
“Some SMSF trustees like to allocate a small percentage of their portfolio to catch any market upside to emerging or overseas market, whether it be equities or commodities, while having a known downside risk. It’s all about risk versus reward and getting some certainty into the portfolio on the downside.
“So there remains a solid core of investors still attracted to structured products and how they can play an important part in their overall investment strategy.”
Instreet currently offers four retail structured products, and is also delivering wholesale/sophisticated investor products on demand.
“Our business model allows us to put together and deliver an investment solution for an advisor’s wholesale clients within 48 hours,” Lucas says. “This makes us a workable alternative to private banks and allows advisors to add value to a wholesale client similar to the service they would get at a traditional private bank.
“The client’s advisor hears first-hand from their clients what they want in their portfolio – and we respond accordingly.
“By listening to adviser feedback on these products, getting an understanding on their client gaps and needs, we are able to deliver an investment solution that meets the demands of their clients.”
Lucas says structured products offer the capacity to craft an investment structure to meet a specific client goal. “They are not for everyone, but for those investors who have a strong view on a market, as well as a firm understanding of the risk involved, they can be an invaluable investment tool.”
