BlackBee is marketing three index-linked structured products to its clients in Ireland.
90% Protected Index 5 & 6, which both track the Eurostoxx Select Dividend 30, and Dynamic European Equity 12, which is tied to the Eurostoxx 50, are part of the Irish investment firms Portfolio Builder platform which also includes 'alpha' and 'yield' products.
Portfolio Builder was created and continues to be guided by the concept of delivering a well-diversified portfolio of structured retail products and alternatives to investors, according to Victor Danylyuk (pictured), investment analyst at BlackBee.
Our house view is that the global economy is somewhere at the end of the economic cycle - Victor Danylyuk
"In the past 12 months as the firm has expanded and our capabilities grown, we have increased our responsiveness to matching investors needs to ever changing market conditions," said Danylyuk, noting that, as a result, the company has already delivered around 50 structured products (including alternatives) to its growing client base in 2018.
BlackBee's index range of products deliver 'beta' exposure to investors with reduced volatility and strong capital protection, and allows investors to "participate in market growth while protecting capital", according to Danylyuk.
"With the addition of features to allow [investors] to profit from falling markets, this represents our fastest growing range of investment products," said Danylyuk. Feedback garnered by the firm highlighted not only the need for some capital protection but also concerns investors had over large management fees (both explicit and implicit) in typical funds and index trackers which negatively impacted their returns, according to Danylyuk. "Our index range of structured products incorporate both concerns."
The firm's book of business continues to grow at a fast pace and so is the book structure, according to Danylyuk, with a shift towards index and yield ranges, i.e. "towards more capital protection and away from the traditionally riskier alpha range".
"Our house view is that the global economy is somewhere at the end of the economic cycle and 'naked' allocation to stocks and bonds carries a high-risk premium," said Danylyuk. "Arguably, it is the time to preserve the wealth through allocation to structured product(s) that potentially could provide some element of capital protection and still extract the value from the up-trending, flat or even down-trending market conditions.
"Risks are always present, even in the bull market," said Danylyuk adding that companies that invest in the technology and people, through data analysis, will gain an upper hand in risk management and market share as a result.
"Investors typically invest across our range, adding and amending their exposure as we release new investment products," said Danylyuk. "Demand for yield products remains steady while investor appetite for alpha style products continues to grow on the back of strong returns: 9.8% annualised since 2015," he said. "Our index range, designed to beat the market, has delivered 7.2% annualised returns since 2015 while carrying lower risk than typical beta orientated funds and indices."
Overall, BlackBee's investment philosophy circles around robust diversification. Every product is designed to play its part in the portfolio's risk diversification process, while keeping the returns intact, according to Danylyuk.
"We expect to see a continuation of the trend of increased allocation to our index range of products into 2019 as markets remain volatile," Danylyuk said.