Demand grows for capital guaranteed structured products
There is growing demand among advisers for capital guaranteed structured products based on direct Australian shares, according to David Jones-Prichard, JP Morgan’s vice-president equity derivatives and structured products.
He made his judgement based on the “strength of advisers that have become new clients of ours” via the launch of capital guaranteed structured product ASX 20 Plus, which is solely distributed by advisers.
“I would say that 40 per cent of our business for the ASX 20 Plus, which closed in October, went to new advisers and dealer groups attracted to a product that gives exposure to Australian shares but also gives capital protection.”
Jones-Pritchard believes the demand is driven by advisers who want to get back into the Australian equities market on behalf of clients, and those who are new to the market, now that the market represents good value.
“Those advisers would normally be telling clients now is a time to dip your toes back in to the direct equities market, but I think they are a little bit coy.
“When the markets are relentlessly selling off they feel more comfortable investing on behalf of clients in the knowledge that no matter how bad things perform invertors can’t lose their capital.”
He said another reason was that “a lot of our competitors have started to disappear (due to market conditions), so you will find that some of these new advisers used to be with competitors products and are now with JP Morgan”.
“There has also been a number of products that have gone to the market and been pulled and a number that have nearly gone to the market and pulled and delayed until next year,” he said.
Structured products are usually issued in June and then again in October and November, he said, and this second period this year has seen very little product issuance.
There were about three products issued in the period from about a dozen issuers who deal with some sort of capital protected products, compared to eight or nine normally in the third quarter.
Recommended for you
Integrated wealth and financial services group Rethink has launched a financial planning arm called Rethink Wealth to expand beyond property investing and into holistic wealth management.
Iress has appointed a chief AI officer to spearhead the fintech’s strategic focus on AI, with chief executive Marcus Price describing how the technology opens the doors to a “new frontier for wealth advice”.
A quarter of advisers who commenced on the FAR within the last two years have already switched licensees or practices, adding validity to practice owners’ professional year (PY) concerns.
The shift in scale and consolidation has led to substantial growth in large privately owned licensees, which have tipped past 20 per cent of advisers for the first time to make up 28.3 per cent of the industry.
