Davy has won the award for ‘Best Distributor, Ireland’ and ‘Best Performance, Ireland’, at this year’s SRP Europe awards in London.

 SRP considered 11 structured products launched by the investment company between 1 October 2023 and 30 September 2024 as well as 17 products that matured during the period.

Davy offers a comprehensive range of structured products as part of its advisory offering in addition to implementing structured solutions across its discretionary portfolios. To cater for a range of client needs, the company’s product shelf includes low-risk capital protected offerings through to growth products for clients with greater risk appetite.

It is very important for us that we offer a compelling range of underlyings, product shapes and counterparty diversification to clients - Mark Caffrey

The year 2024 saw significant growth of Davy’s structured product business, Mark Caffrey, director, structured solutions at Davy told SRP. Among the company’s offering for 2024 were autocalls, callables and protected bonus notes linked to European, Swiss and Japanese equity indices.

“It is very important for us that we offer a compelling range of underlyings, product shapes and counterparty diversification to our clients,” said Caffrey.

One of the highlights for last year was a product linked to the Eurostoxx 50 that was structured with a conservative 65% knock-in level.

“We revamped our advisory proposition at the end of 2023 and the first product launched since the revamp autocalled last year, returning over 10%.

“We were delighted to deliver double-digit returns to clients in a product alongside strong levels of protection. We were very happy with the significant levels of interest in our offering throughout the year, with strong interest also shown in Swiss and Japanese equity underlyings,” Caffrey added.

Left to right: Michael MacGrath, head of global investment selection and Mark Caffrey, director, structured solutions.

When it comes to underlying assets, Davy’s clients prefer products linked to mainstream equity indices, including the Eurostoxx 50 and Topix, while the Euro iStoxx Equal Weight Constant 50 and Eurostoxx 50 ESG have also been used in products that have since matured.

“We like to keep it simple where we can, and our clients like to be able to track their index performance directly. Whilst volatility stabilisation and other optimisation features can play an important role in product design, our clients generally prefer benchmark indices that are widely understood and widely published.

Simplifying the tax treatment of investments would be a great start in getting more people comfortable investing - Mark Caffrey

Davy works with a range of issuers, including banks from the UK, Europe and the US, to ensure its clients benefit from the diversification this brings.

“We are fortunate to work with really great institutions in this regard and with a strong sense of partnership,” said Caffrey.

The SRP Ireland database shows that the market share for capital protection vs capital-at-risk products was approximately 80:20 in 2024. But Davy’s clients tend to show more appetite for the latter.

“We see more interest in capital at risk solutions in our private client base where the defined returns we can offer can play a meaningful role in client portfolios," said Caffrey. “We also have a large client base for whom capital protected offerings are very important and, in some cases, mandated. It is important for us to be able to serve both needs."

Irish market

The Irish market is small in terms of the number of active participants, but probably “punches above its weight” in volume terms in Europe.

“The market historically was dominated by life wrapped and deposit-based solutions but has very much pivoted to notes and certificated format in recent years,” said Caffrey who welcomes proposed tax changes to make it more attractive for households to invest.

“There is more than €150 billion on deposit in Ireland – mostly in on-demand or current accounts earning little or no interest.

“Simplifying the tax treatment of investments would be a great start in getting more people comfortable investing. This can benefit the market as a whole and structured products would certainly be a beneficiary too,” Caffrey concluded. 

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