Instreet adds a shine to portfolios with regular income from gold
The boutique fund manager, Instreet Investment, has launched a new structured product designed to give investors the potential to tap into a rising gold price as well as receive a regular income stream.
The product, Instreet Gold plus Yield, which is being offered fresh on the heels of recent large falls in the price of gold, is designed for investors who have a bullish view on the gold price over the next three years The income stream, coupons, which total an indicative 7% a year, will be paid irrespective of how the gold price performs.
Instreet managing director George Lucas says: “Many investors are attracted to gold as an asset that offers their portfolio diversity, but in portfolios looking for income they may shy away because traditionally holding physical gold doesn’t produce an income.
“This product addresses that challenge on how to obtain regular income from an exposure to gold while still allowing them to benefit from potential growth in the gold price. What this product does is trade away some upside in the gold price to get a regular income.
Lucas says in broader macro terms there are many “gold bulls” looking to hold gold as part of a diversified portfolio strategy. With yields on other defensive assets such as term deposits falling investors are looking for alternatives to generate yield in portfolios. In addition the price of gold has fallen over the past 12 months by 30% making gold more attractive today than a year ago.
The Reference Index Value (which determines the final value of the units) is calculated by reference to the change in the gold price over each month of the investment term, subject to a monthly cap of 5% on positive performance – the upside limit.
Lucas says the products risks Include:
• No capital protection or guarantee of financial return,
• There is no floor on the monthly return.; similar downside as holding physical gold;
• it is an unlisted investment with redemptions quarterly; and
• Counter-party risk
Instreet provide structured investment products. They work closely with the financial adviser community to conceive and distribute retail structured products. After identifying adviser needs and market trends, Instreet builds structured products sourcing quality wholesale providers. By doing so, Instreet makes institutional assets available to individual investors. The end result is a range of solutions designed to better achieve the goals of clients and advisers. More information at www.instreet.com.au