Tailored structured solutions in demand

Tailored, white label structured solutions are in demand with dealer groups and boutique fund managers wishing to gain access to broader asset classes and differentiate their offering, according to JP Morgan.

There has been an increase in the quality and breadth and a lowering of fees in structured products in the Australian market due to increased competition over the past five years, JP Morgan said.

“We are seeing increased demand from dealer groups and boutiques for products which are available exclusively to suit their clients,” said David Jones-Prichard, executive director for equity derivatives and structured products at JP Morgan.

Simpler structures, increased use of Australian equities and shorter maturities have led to a decreased reliance on gearing in structured products recently, but 2010 has brought increased demand for exposure to global asset classes, JP Morgan said.

“In a period of investor fragility and increased competition, the ability to create a product in direct response to a client request, or after extensive consultation with financial advisers, is proving to be a key attraction,” Jones-Prichard said.

JP Morgan provides the synthetic portfolio protection swap for SMA administration specialist Linear Asset Management’s Continuously Protected SMA product. The Linear SMA provides investors with access to several Australian equities portfolios, and has capital protection that stops the model portfolio from dropping below 80 per cent of its highest observed value, Jones-Prichard said.

JP Morgan has also developed tailored solutions for Westpac and Heathley Asset Management in the first half of 2010.

“White label structured products provide a unique way to offer clients a tailored investment solution to suit the current market environment and their investment goals,” Jones-Prichard said.