Stropro looks to be the market leader for structured products in Australia, bringing wholesale investors market leading opportunities from the world’s best global investment banks. We sat down with CEO & Co-founder Anto Joseph to discuss the rise of Stropro and its addressable market.
Structured products is Australia's best kept $5 billion secret.
Structured products — versatile investments designed to provide enhanced returns and navigate volatility for institutional and high net worth (HNW) investors — are the darlings of wealthy investors in the rest of the world. Typically making up 5–7% of a HNW portfolio, today’s structured product market represents more than $10 trillion around the world.
Australia, however, has lagged in the takeup of these products primarily due to a lack of access. Most HNW investors hold no structured products, and those that do only have them because they have had exposure to them while living overseas. But Stropro intends to change all that.
“We’re going to create a structured product revolution in Australia,” CEO Anto Joseph states confidently.
“I can see Stropro changing the investment landscape in Australia forever, and bringing Australian investors in line with the rest of the world in terms of their access to the same products the very best investors use in their portfolios.”
Joseph, who left a successful career at Citi to pursue this structured product dream, likens the nascent structured product boom to the ETF landscape in Australia a decade ago.
“If you look back ten years at the ETF market, we are really just starting here, no one really knew much about them or how to use them. Now they’re absolutely core to most investment strategies. Structured products can and should be the same.”
The problem is largely education, Joseph says. Australian investors simply don’t know much about structured products and what they can do — namely, provide yield opportunities without moving far up the risk spectrum. Particularly now, as a low-yield environment is set to continue for years, and dividends are falling away, structured products should play a fundamental role in HNW portfolios.
“The local market for HNW investors in Australia is around $2 trillion. We see a growing wholesale and sophisticated investor market looking for new investment ideas and we are working with both sides — investors and advisers– to bring them global opportunities."
Importantly, Stropro is not an issuer of structured products. Rather, the company offers bespoke products for their users by leveraging a panel of global investment banks.
“Ideation is a big part of what we do,” Joseph explains. “We allow investors and advisers to tell us what objectives they have in mind, and we work with a panel of banks to find the best investment solution.
Technology is also a big part of Joseph’s planned revolution. Structured products today are largely managed using spreadsheets and emails — archaic processes that he says must be updated for the industry to thrive. Stropro’s platform strips away all of that and digitises the entire process.
“My favourite moment with Stropro was when our first investor came onto the platform and set up their SMSF, got it verified and purchased their first investment. It took 20 minutes."
"That process, which I led investors through thousands of times in my old job, used to take weeks, about three face to face meetings, and reams of paperwork. By really understanding the operational processes and applying the power of tech, we’ve made the same compliant process, now with tremendous ease. This is what an affluent client intuitively wants. Which is how it should be.”
This ease of access is the fuel for the coming structured products boom, Joseph says. “Access has always been the issue for this asset class — the process is just too slow and not scalable. Now we have democratised access to structured products and made it incredibly easy and scalable.
We’ve also built in better reporting capabilities so investors can see their structured products in real-time, and we’re working with the big wealth platforms and accounting platforms to provide holistic reporting so investors can have seamless visibility, no matter where the rest of their investments sit.”
The Stropro team includes a wealth of experience that underpins its success to date. Ben Streater, also ex-Citi, is a structured products expert managing a $4BN investment portfolio in his former role. Director Abraham Robertson has deep experience building financial marketplaces underpinned by technology, including commodity exchanges in South Africa and Europe, and a renewables marketplace in Australia. Technology wizard Ritam Gaur, previously Associate Director at KPMG India, weaves the tech magic that has brought the Stropro dream to life.
And it’s certainly starting to come alive. The platform launched a structured product reporting tool to provide the existing structured product market with greater transparency of their holdings. “We’ve had $10 million migrated for clients so far, having just opened up this tool the last two months,” Joseph grins.