Australia’s richest man extols virtues of structured products

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Australia’s richest man, Harry Triguboff, has been extolling the virtues of investing in structured products, despite ongoing turbulence across the country’s mortgage market and economy as a whole.

Eighty-three year old Mr Triguboff – the founder of the Meriton high-rise apartment block empire – is positive about the future prospects for the investment class. He is thought to be worth around $10.62 billion and much of his wealth is tied up in land bank and construction projects including almost 6,000 rented apartments, childcare centres and serviced apartment buildings. Despite his wealth, he told the Australian Financial Review (AFR): “I spend very little. I have no boats, I have no planes. I don’t say I live like a pauper. I live very well, but I’m not extravagant. I have no time to be extravagant. I work very hard and that is the reason the company is so good.”

As he is so careful with his money, he considers all of his investments, no matter how small, essential to his overall portfolio. Mr Triguboff invests a ‘key’ 0.72 per cent into the structured products sector in order to hone his overall insights into the overall investment arena and to make sure that he is well aware of any changes happening in the market.

The products, which are structured with 35 per cent downside margin, according to the AFR, are Mr Triguboff’s investment vehicle to invest in ASX 200 stocks. “I have four shares and if they don’t go below 65 per cent over the 12 months I get all my capital back plus 10 or 11 per cent interest. In the 10 years I have been doing this I have only lost money once,” he told the publication.

Often linked to a stock or a basket of stocks in which case the investor is protected from share price volatility for a fee, structured investment products see the investor returns capped at a set level, which can either be an negative or a positive, depending on the outcome. Currently, a large number of wealth management companies tailor structured product investment options for their high net worth clients.

In terms of his investments, Mr Triguboff has the ability to regulate supply as a result of his retaining apartments in his major developments, which also allows him to obtain ready cash should he wish to divest his asset portfolio at any time. Indeed, his firm Meriton now has its investment capital spread across a varied enough range of assets that it is strong enough to be able to put up with the majority of external changes in the overall marketplace.

Apartments remain a solid investment choice for many investors, says Australia’s richest man: “Rents are still very strong despite the fact there is a big boom in building and that’s the one market I always watch. After the big rises we’ve had, prices might fall a bit, but they won’t fall much. I am keeping a lot, so there is the proof.”

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