It is something of a miracle given their relative (and I stress relative) lack of availability, that structured products are enjoying such strong sales.
Currently, advisers can invest in them directly though providers but not, somewhat anomalously, via many of the leading fund supermarkets or wrap platforms. And that strikes me as rather baffling.
As part of a wider exercise we recently asked a sizable number of advisers - 242 to be precise, many of whom rarely use structured products - which, if any, platforms they would like to see host structured products. The results were both predictable and surprising.
The humdrum aspect refers to advisers' choice of platforms. No surprises here. Cofunds, Selestia and FundsNetwork were the three platforms advisers most wanted to see offer structured products. Transact and Nucleus came next, although they already offer a limited range of protected investments.
More surprising were the numbers involved. More than half (54%) of advisers said they wanted to see Cofunds offer structured products, while almost as many (52%) said Selestia, with FundsNetwork (48%) not far behind.
As you would expect, regular and occasional users of structured products were the keenest to see them offered on platforms, but it is interesting that 'rare' users were almost as enthusiastic. This suggests that limited accessibility is, to some degree, hampering usage, as wavering advisers would perhaps be more inclined to include structured products in client portfolios if they appeared on more platforms.
Clearly then, the demand is there; so what's the problem? The truth is that we - and, I'm sure, many other providers - have been lobbying for structured products' inclusion on platforms for some time. And the platforms, understandably in some ways, point to the technical hurdles, and say they have other priorities. Fair enough. But I'd make two comments here.
First, there is a proven demand for structured products on platforms. Our Defined Returns Plan (Annual Kick-Out) was the fastest growing fund on Nucleus between January and February this year. That includes all funds, much as that might irk some of the conventional fund groups.
Second - and I'll admit this is something of a peripheral argument - structured products are simply not the niche products platforms suppose them to be. Look at the sales: in the first two months of 2009 around €3.5bn was invested in structured products - that's more than a third of the €9bn taken in 2008, which was itself an impressive year.
Look at the maturities, which largely show that, at worst, investors got their money back in 2008 - something I'm sure they were very happy about given the 30%-plus losses they would have suffered in unprotected equities. Look at what structured products actually do. Everyone is very excited about absolute return funds, but are they so different from structured products?
Both aim to preserve capital in tough markets and will, in exchange for this protection, underperform more conventional funds in a bull market. I'm not sure I see a huge difference there, although structured products offer investors a much clearer idea of what they can expect after a set period. (And I would argue are much cleaner in terms of understanding how the return is generated.)
Platforms were not designed to host structured products, of course, but the technical issues are simply not that great. A sceptic might point out that, as the commercials of structured products do not always work for the platforms, there might be other, more significant factors in play here.
Indeed there might. Either way, I believe that, as an industry, we will get where we want to be - I just hope we get there sooner rather than later.
Colin Dickie is a director at Barclays WealthIFAonline
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