1. What is the basis of Stewards Investment Capital Limited's approach to wealth management? What are your offerings in this market?
When it comes to wealth management, we are a strong proponent of investing in new alternative asset classes.
This is often in stark contrast to traditional wealth managers, who tend to focus on diversifying their clients' portfolios into existing, established asset classes such as listed equities, bonds, real estate, and commodities.
The clients who come to us are looking to diversify their portfolios into asset classes such as digital assets, private credit, market-neutral strategies, and structured products. It is in these niche assets that we distinguish ourselves as wealth managers and financial advisors.
This strategy was adopted to differentiate ourselves from our competitors, but over time we came to embrace it as we realized that the potential returns from alternative strategies far exceed those of traditional investment sectors over a long period of time.
As alternative asset specialists, we face a very high hurdle to success, as our target customer is not the average investor, and our investment space is constantly evolving at a rapid pace. However, it is these very challenges that protect our position as a key leader in the wealth management field.
2. Current macroeconomic conditions present a challenge for investors and their advisors. How do you, at Stewards Investment Capital Limited, approach the quest for the optimal balance between return and risk in such an environment?
Predicting the future is not easy. At Stewards, we focus our energies on mitigating the unpredictability of equity markets by thinking strategically.
There are many strategies we recommend to our clients, but if we had to list the best strategies for navigating macroeconomic uncertainties, it would be the following:
i. Allocate part of your risk portfolio to tailwind assets.
If your portfolio contains a risk segment, take 10% and allocate it to tailwind assets such as digital assets, artificial intelligence or even space exploration. These assets have an asymmetrical return, making them an excellent addition to risky portfolios. In the event of outperformance, this 10% allocation can boost your portfolio's performance by more than 100%, but in the event of underperformance, the worst would be a loss of only 10% of the portfolio.
ii. Look beyond traditional instruments for returns.
When investors think of yield, the natural reflex is often to turn to corporate bonds, income funds or bank deposits. The accessibility of these instruments works as a double-edged sword, as any attractive yield will automatically be bought by expert participants. We recommend private credit, which can offer twice the yield and better guarantees than these listed bonds.
iii. Limit your disadvantages and delimit your advantages.
In March 2023, we launched a structured products fund, one of the very first in the southern hemisphere. The fund invests most of its assets in investment-grade bonds and allocates the remainder to long-term call options on various industry segments. This creates an investment product with limited downside and almost unlimited upside, perfect for volatile times.
The solution is simple: think differently.
3. New segments are emerging, notably a younger generation of ambitious consumers and entrepreneurs, whose emergence is partly stimulated by the transfer of wealth from their parents. How do you appeal to them, and what propositions do you offer?
When it comes to the younger generation, cars are a very good analogy to use it's easier to sell a new Porsche than a vintage Rolls Royce.
As specialists in alternative assets that reflect the innovation and attractiveness of a brand-new Porsche, we have been and still are very well positioned to meet the expectations of young people.
Our core investor base is made up of professionals and entrepreneurs in their forties, so we're very pleased with the way we've developed our client base on this particular front.
We are open to customers who derive their wealth from an inheritance, but this segment in general can be very difficult to access, mainly because such inheritances tend to be locked up in tightly controlled "trusts" or are managed by a "family office" with very strict investment mandates.
4. Faced with the influx of high-net-worth individuals and their expectations of personalized guidance, how will local wealth management and family offices manage to stand out from the crowd?
We know that we can't satisfy every facet of wealth management. That's why we intend to remain focused on alternative assets for the time being.
To illustrate the complexity involved in personalized service: while the entry-level investor may be content with a simple portfolio of securities, the next segment may need allocations to a private placement in start-up technology companies, and the next segment may require a 24/7 concierge service.
The verticals associated with wealth management can go very high very quickly and can be very profitable. But faced with a highly demanding clientele, failure to provide the required standard can also mean business failure.
We understand the demands for customized wealth management services, but we choose to remain investment specialists first and foremost.