Investec launches dedicated SP service for 'wealthier' investors

Investec Wealth & Investment (IW&I) has rolled-out a dedicated Structured Product Service (SPS) for wealthier clients of financial advisers. Clients can choose from two pre-determined portfolio mandates to best reflect their personal circumstances, risk appetite and investment objectives.

Mark Stevens (pictured), head of intermediary services at Investec Wealth & Investment, said the new dedicated service follows a "thorough consultation with advisers". "We have extensive experience of the structured products market and, (...) we believe now is the right time to launch a dedicated service," said Stevens, in a statement. "Managed correctly, structured products can provide the outperformance and portfolio protection that many advisers and their clients are looking for."

The Defined Returns Structured Product Portfolio (Medium/ High Risk) is intended to provide a positive return in multiple equity market scenarios, although returns are likely to be negative if equity markets fall substantially (i.e. between more than 40% to 50%) and do not recover over a period of time. The sensitivity of the portfolio to the underlying equity markets would be approximately between +35% to +75% at the initial investment stage. The target return, net of management fees, is UK Base Rate plus 3%.

On the other hand, the Diversified Growth Structured Product Portfolio (High Risk) is aimed at providing greater potential for capital growth with a higher level of risk. The sensitivity of the portfolio to the underlying equity markets is likely to be nearer the higher end of the circa +35% to +75% range at the initial investment stage (and perhaps even greater than +75%). The target return, net of fees, is UK Base Rate plus 4%.

"Portfolios will be managed by a team with a high level of experience of derivatives and bank credit, the two key components of any structured product," said Peter Tasou, associate portfolio manager & head of structured products at Investec Wealth & Investment, in a statement. "The team understands how to optimally design structured products, construct and manage portfolios and factor in the changing risk parameters of each product over its life cycle."

Both options give clients access to 'institutional' rather than 'retail' structured product markets, which, according to Investec, has the advantages of providing substantial cost savings as fees charged in the 'retail' market are materially higher; as well as access to liquid secondary markets (unlike structured products traded in the 'retail' market, whereby an investor's money is often 'locked-in' for a multi-year period). Combining these structured products in the context of a portfolio will allow investors to diversify risk and maximise potential returns, stated the fund manager.

"We have very close relationships with product providers, who respond to our needs," said Tasou. "We adopt an active rather than passive approach to structured product portfolio management as, contrary to popular perception, they are not simply 'buy and hold' investments."

All portfolios will be centrally managed by IW&I's specialist structured products team. The minimum investment for both products is £250,000, and each will only be made available to clients following the completion of a "rigorous due diligence process".

Investec is the most active issuer and distributor of structured products in the UK retail market. In 2016, the South African bank marketed over 120 retail products with over £750m in sales and a 34% market share. Year to date, Investec has issued 30 products.

Structured income plans warrant interest from UK retirement savers, Investec

Investec tweaks UK range as pricing pressures bite

Robo-advisers will help to grow the direct to market offering, Investec