.avif)
Inflated equity markets, volatility, and low interest rates have left many investors struggling to generate income without taking on excessive risk.
At Stropro, we’ve developed ways to help wholesale and sophisticated investors enhance yield, preserve capital, and diversify in the current market.
The Challenge: Low Rates & Rising Risk
With Australia’s official cash rate near 0% and expected to stay there for years, traditional income sources like savings accounts and term deposits are delivering minimal returns. To chase yield, investors have shifted into:
- Equities
- High-yield bonds
- Unlisted investment trusts
But this move up the risk curve can leave portfolios exposed. Vanguard data shows that to earn a 4% income return, the growth asset allocation needed has jumped from 50% in 2015 to nearly 100% in 2020 — effectively doubling portfolio risk.
Yield Pressures in Dividends & Property
Australian Dividends Under Pressure
The big four banks, once the cornerstone of income portfolios, have slashed dividends to preserve capital during COVID-19. Other traditionally “safe” companies — like James Hardie, Challenger, Qantas, Transurban, and Sydney Airport — have followed suit.
The ASX 200’s grossed-up dividend yield has fallen from its 20-year average of 4% to around 2.8% p.a., pushing investors into riskier, high-yield stocks.
Property Yields Are Falling Too
Sydney and Melbourne residential yields have dropped to around 2.9% p.a. For A-REIT investors, volatility, rising vacancy rates, and tenant incentives have put distribution sustainability into question.
High yields can sometimes indicate high risk — as the GFC showed, when the Australian REIT index fell 77% between 2007 and 2009.
Hunting Income With Clarity
Despite the low-yield environment, opportunities exist to enhance returns without simply piling on risk. At Stropro, we design structured investment strategies that:
- Deliver defined returns with clear risk parameters
- Buffer against volatility while maintaining exposure
- Diversify into otherwise hard-to-access global assets
Example: ASX 200 Linked Investment
In response to concerns about inflated markets and geopolitical uncertainty, Stropro sourced the ASX 200 Linked Investment from a top-tier global bank.
Key features:
- Defined return with downside protection throughout the term
- Based on 20 years of back-testing, a 0.00% historical probability of loss
- Designed to navigate volatility while maintaining equity exposure
Adviser & Investor Takeaways
- Low rates force investors into riskier territory — but risk can be managed with the right structures.
- Structured investments can provide targeted returns with embedded protection.
- Stropro’s platform gives access to exclusive institutional opportunities not available through retail channels.
If you’re interested in enhancing income while controlling downside risk, register on the Stropro platform.
Author: Anto Joseph, Director, Stropro
For wholesale, sophisticated, and professional investors only. General information, not personal financial advice.
