Latest: UOB debuts fund of structured products in Malaysia

The UCSSRF seeks to provide income and capital preservation by focusing its investments predominantly on a structured product as its underlying asset – the fund aims at achieving its investment objective by investing its net asset value (NAV) into a structured product comprising a basket of selected stocks. In addition, the NAV is also invested in derivatives, money market instruments, deposits and/or cash.

The retail market for structured notes with principal protection has been growing in the past two years - Lim Suet Ling, UOB AM

While the strategy offers potential income, investors could also benefit from short-term capital appreciation by the selection of a basket of stocks and exchange-traded funds (ETFs) listed in major exchanges globally, according to Lim Suet Ling (pictured), chief executive officer, UOB Asset Management (Malaysia).

‘While most investors are seeking low volatility returns, the retail market for structured notes with principal protection has been growing in the past two years. The shift in this investment behaviour is due to a highly volatile market impacted by the pandemic outbreak and ongoing geopolitical tensions,’ she said.

Investors’ capital will be returned in full as long as they stay invested until maturity, which is up to 18 months. UCSSRF is available for subscription in the local currency at an initial minimum investment of RM10,000 until 10 March 2023, at selected distributors across the country.

The Index Standard launches new FIA forecast credits and model allocations

The Index Standard has expanded its insurance coverage with the launch of the FIA Forecast Credits and FIA Model Allocations, two new data-driven tools designed ‘to help financial professionals understand and compare the index-linked crediting strategies in fixed index annuities (FIAs)’.

The tools are aimed at helping financial professionals to understand and compare the wide range of choices of so-called crediting strategies linked to the performance of one or more indices.

‘The complexity of indices and crediting strategies and the lack of resources to better understand them have been a huge barrier for financial professionals and their clients when considering FIAs in retirement planning,’ said Jay Watson (right), head of analytics at The Index Standard.

FIA Forecast Credits provide expected rates of return of individual crediting strategies in FIAs; while FIA Model Allocations offers suggested allocations to the crediting strategies in an FIA most likely to generate the highest long-term returns, while diversifying risk.

The Index Standard offers two algorithmic allocations - Balanced Blend and Boosted Blend.

US broker dealer hit with penalty over structured product sales

The Securities and Exchange Commission has announced that Centaurus Financial Inc., one of its branch managers and a registered representative had reached a US$1 million settlement in connection with unsuitable sales of ‘complex structured products to dozens of clients’.

Centaurus Financial is a large independent broker-dealer based in southern California with 375 branch offices and 615 brokers and financial advisors known in the retail brokerage industry for selling alternative investments.

According to the SEC, from June 2016 to July 2019, a Centaurus broker and seven other registered representatives from the Lexington, South Carolina, branch office ‘made recommendations of [variable interest rate structured products] to ninety-four retail customers for whom the recommendations were unsuitable in light of each of the specific customers’ financial situations and needs.

Centaurus failed to implement and follow customer-specific suitability procedures, and also violated the broker-dealer books-and-records provisions of federal securities laws, the SEC said.

Centaurus Financial agreed to pay a civil penalty of US$750,000 and disgorgement of almost US$5,000; while the branch manager was charged with a civil penalty of US$206,000 and disgorgement of US$105,000, including interest, and to serve a six-month suspension as a supervisor. The sales representative agreed to pay a civil penalty of US$35,000 and serve a six-month suspension.

UK fintech rolls out retirement income platform

Socius Technologies has launched a new retirement income platform targeted at insurance and pension providers, wealth managers, and advisers who service the needs of individuals approaching and in retirement

SPERO, an acronym for Systematic Platform for Enhanced Retirement Outcomes, will offer dynamic retirement income solutions ‘that are fully tailored to each individual’s unique circumstances’ in what represents a significant shift in terms of the options offered to individuals to provide an income in retirement’.

The platform has been designed in response to changes in the pension landscape in the UK, across Europe, the USA and Australia which give individuals more choices in retirement.

“The platform is agnostic as to what the underlying investment theme is – the key development here is the individualisation,” David Macdonald (right), CEO of Socius Technologies Group Limited, told SRP.

“The underlying investments will likely remain as funds-based solutions (equity and bonds) although there is nothing restricting other more structured investments to sit within the portfolios.”

According to Macdonald, the personalised ‘strategy’ that the platform facilitates takes into account the individual’s personal circumstances - size of pension pot, age, attitude to risk, critical income needs etc. - to determine, for example, the mix of drawdown income versus annuity income.

“The key shift here is moving away from large ‘cohorts’ of retirees all being treated the same,” he said.

The platform is aimed at filling a gap around retirement products or services and help guide retirees and their advisers to dynamically combine income drawdown and annuities to meet their retirement income goals based on their current situation.

S&P DJI introduces environmental metrics for commodities

S&P Dow Jones Indices (S&P DJI) has launched a first-of-its kind commodities index which incorporates environmental metrics.

The S&P GSCI Climate Aware is a broad-based commodity index offering exposure to the global commodities sector in line with its parent benchmark, the S&P GSCI. The index applies environmental factors in its rules-based methodology and reallocates the weights of its constituents away from higher-intensity fossil fuels and shifts them to commodities that are crucial to the global energy transition while maintaining an allocation to the food commodities that sustain life.

The S&P GSCI Climate Aware index uses the S&P Global Commodity Environmental dataset developed by S&P Global Sustainable which provides commodity-level physical and financial impact data on greenhouse gas emissions, water consumption and land use for all the constituents of the S&P GSCI.

The index seeks to achieve a 25% reduction in environmental impact per dollar invested compared to the S&P GSCI, along with a 5% year-on-year decarbonization target, while maintaining total food production and ensuring land and water environmental impacts are no higher than the S&P GSCI.

‘The dataset enables investors and corporates to understand and quantify the environmental risks and opportunities of specific commodities, as well as across portfolios, indices, and benchmarks,” said Steve Bullock (above-right), global head of research and methodology, S&P Global Sustainable.

The index launch comes on the heels of a collaboration between S&P DJI and J.P. Morgan to publish a research report to study the application of environmental criteria on commodities benchmarks.