Old Mutual International (OMI), the international arm of Old Mutual Wealth, launched last November a new structured products initiative to engage with international advisers. SRP spoke to the firm's head of structured products, Andrej Ogorevc (pictured), about the market reception of the initiative, and prospects on the international structured products market.

Is OMI's third party structured products initiative responding to expectations?
Our new third party structured product initiative, launched last November, is a new concept in the international structured product market. It presents international advisers with a new way of doing business and, as with any new concept, it takes time for momentum to build. I am pleased to say that we are seeing this momentum build and the number of adviser businesses interested in the new breed of structured products is growing.

Can you provide an update on the initiative?
The OMI initiative aims to reduce the production and distribution fees on structured products sold via the OMI network, as well as to make the products themselves more transparent and easy to understand.

All capital-at-risk products' index underlyings must be found within a list of 41 well-known indices provided by OMI. All worst of capital-at-risk products should be linked to no more than three indices, while only European-style barriers are allowed.

Do you have plans to expand the underlying range?
We are happy that the existing index list available, through the current structured product range, is already well diversified and provides clients with good access to equities from across different geographical regions.

Feedback from advisers showed that there was strong appetite for products with shorter maturity dates. BNP Paribas shortened the term on the Global Equity Autocall, which was recently launched, from five-years down to 3.5-years and increased the autocall frequency.

There is still strong interest from other providers, and we continue to be in ongoing discussions with them. However, the partnership with BNP Paribas is working extremely well. Advisers that we work with in the offshore market are not overly exposed to BNP Paribas so advisers aren't knocking the door down for more choice from alternative issuers. Over time, as momentum continues to build, we do expect this to change, and at that point we will look to introduce wider choice of issuers.

Are international investors' expectations shifting towards a particular type of product?
Demand for capital protection will remain high due to political risks and the fact that equity markets have gone through a good bull run in the past eight years. The increase in US interest rates has helped to improve the terms of capital protected products and we can now see products with five-year maturities and participation levels above 100%.

The global structured products market has seen a sustained shift away from capital protection in recent years, with the share of 100%-or more-capital guaranteed product sales dropping from 36.2% in 2014, to just over 25.5% in the year-to-date as of May 4.

What opportunities are you looking for?
We see a real opportunity in the market for 100% capital protected solutions. Demand from clients has increased in this area, possibly as a result of greater uncertainty and possibly because in the international market such solutions were not always available. BNP Paribas' product range; CTF Investments, available within our new initiative, is extremely competitive and 100% capital protected products are, once again, possible to construct.

A challenge with any new initiative is trying to build momentum. These structured product solutions appeal to advisers who are looking to change the way they do business, with the aim of delivering better outcomes for their clients and to future proof their business model from a regulatory perspective.

With any new structured solution advisers need to know that regular tranches will be available, so once one closes another opens immediately. We are successfully meeting this requirement with BNP Paribas and advisers know there will always be an option available to meet the demand from their clients.

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