As the saying goes, necessity is the mother of invention. Structured product news this week saw several high-profile technological announcements which have attracted attention.
SRP spoke to Michael Nelskyla, chief executive officer of Save - a first-of-a-kind savings advisor tech-driven platform to help savers earn potentially higher yields with the Federal Deposit Insurance Company (FDIC) deposit insurance – about the platform’s launch.
In just over one month, the fintech start-up has onboarded thousands of customers with an average account size of over US$25,000 and growing.
The system assesses risk profiles algorithmically - Michael Nelskyla
“Save is not a product, it’s a discretionary advisory platform, where the customer will elect their risk profile upfront and the platform will allocate the customers funds into the corresponding risk bucket,” he said. “The system assesses risk profiles algorithmically: for example, if you indicate you are very risk averse, you will be allocated to the conservative portfolio. Unlike the structured products market, there is no selling; no human intervention or associated distribution governance risk.”
Marex Financial Products, the structured note arm of commodities specialist Marex Spectron, has rolled out a landmark tier 2 capital structured note. The 5.5-year Swiss franc subordinated note has 100% principal protection and an annual coupon of 2.55% plus upside participation in the Swiss Market Index (SMI) at maturity. The structured note responds to increasing demand from investors turning to structured notes to get yield.
Marex chief executive officer Nilesh Jethwa, told SRP this new type of instrument allows investors to preserve their principal, have a meaningful annual income and retain exposure to any equity upside.
US based fintech platform SoFi has relaunched its SoFi 50 ETF, re-indexing the product to reflect the firm’s most prolific equities among members. The ETF, which followed the Solactive SoFi US 50 Growth Index upon its original release in 2019, now tracks the performance of the SoFi Social 50 Index. This consists of the 50 most widely held US listed equity securities held in SoFi members’ self-directed brokerage accounts with SoFi Invest, before added expenses such as fees. The firm has developed multiple retail themes that not only features Silicon Valley elite, but also airline, marijuana and cruise companies.
Staying in the rebalancing sphere, and focusing on constant proportional portfolio insurance (CPPI), a proposition that straddles structured products and managed funds.
The idea of CPPI originally came out of portfolio insurance, popular in the 1980s when early programme trading algorithms moved an equity portfolio steadily into cash in a rules based way when markets declined, with the idea of protecting that portfolio by steadily reducing exposure to restrict losses. The strategy can be thought of a as a self-constructed capital protected structured product. Almost all CPPI investments select a single risky asset such as a fund or portfolio and a risk-free asset such as cash or high grade short dated bonds. The risky asset provides the participation and the risk-free asset the capital protection component. How much of each is needed depends on the performance of the risky asset much like a structured product’s payoff depends on its underlying asset(s).
Swiss structured product specialist Leonteq is reviewing its local management set-up and will announce new appointments in due course, after the departure of Dennis Wan, chief executive officer at Leonteq Securities (Hong Kong).
Wan joined Leonteq in December 2019 as chief executive officer Hong Kong and head of Hong Kong sales with responsibility for the firm’s distribution into Hong Kong. Based in the special administrative region (SAR), he reported to Christian Gmür, head of sales for Asia.
Leonteq was seeking to capitalise on Wan’s senior relationships across Asia and his ‘in-depth knowledge of the local markets’.
Image: Joe Wagner/ Unsplash.