A new retail product

Author: | Published: 1 Dec 2007
Would a product linked to the best large-cap stocks on this exchange be better value?

Early in the history of retail structured products, issuers could innovate. They would differentiate themselves from competitors by structuring products that referenced assets that were previously unseen in the retail space. In the more mature modern market, success relies on structured products that have understandable investment strategies and appeal to more investors. Products linked to obscure or large unrelated baskets of assets do not fit these criteria.

One way that issuers can differentiate their retail structured products in a commoditised marketplace is to expand the role of the issuer. Instead of giving access to assets, the issuer should use active investment strategies that attempt to provide returns in excess of those of the assets. The result is a product that defines a range of assets, along with a quantitative methodology for determining and adjusting the...