If it was not clear by now, innovation in structured products will not appear in the form of a new, super payoff or any specific financial engineering, and while people talk about technology as the new home of innovation, they are probably wrong.
You need to go back to the point of investments to get an idea of where the innovation is and should be, and that point is, making money in a way that inspires a greater degree of interest than popping your cash in a deposit account. So, your choices are a particularly fabulous return, although those are few and far between and tend to require the taking of an awful lot of risk.
The other more recently traditional home of innovator excitement has been the underlying. What's on offer there? You used to be able to inspire even the more conservative investor with the emerging markets. Marvellous brochures and exotic pictures and quite astonishing percentage rises in local shares or share indices almost had the look of designs favoured by Trailfinders.
Emerging markets were then sold on more likely industrial outcome and the rapid development of shipbuilding, car manufacturing and technology companies. Suddenly, countries that were far flung from western investors could point to fabulous manufacturing output and incredibly impressive figures from whatever angle you wanted to analyse them.
Particularly the rise in technology company wealth led to a fascination with technology and then social media companies as sectors as the underlyings of choice. Structured products proved to be wonderful in the way they could offer you short or long positions in certainly social media companies.
These underlyings are all relevant and allow for some attractive structured product creations, while, at the same time, the inevitable lurch towards commodities pops in and out of favour, but stand aside for the new true favourite, ESG.
Environment and social governance is a gem for investors, although you could be fooled by an almost complete lack of interest in Asia and large parts of the so-called developed world. Undeterred, product creators and distributors keep knocking on this door with a stubbornness that makes it look as though they know something that no one else does.
Monday will feature new news from the US, with new products to emerge based somehow on regular and well-known environmental causes, and the end of this month will see the rather moribund Swedish structured products stirred into a more lively state with the listing, on Nasdaq, of a structured product that tips its cap to ESG.
We have been told enough times that this is the innovation and if investors finally get round to appreciating that their meagre returns may as well be based on the right thing, then the necessary momentum will be generated and we can start the discussion about whether or not ESG is an asset class. As pointless as that discussion might be, it would be good to have it!
Image credit: Freepik.com
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