The structured products market is "the most exciting investment class in the financial services industry." That's according to the New York-based Structured Products Association (SPA), admittedly a biased source. But the association has a point. Growth in the US market was certainly impressive in 2006, and 2007 looks set to be even more successful.
According to the recently published Greenwich Associates/SPA US Market Survey, issuance in the US market for 2006 was $64 billion in 2006, compared with $193.6 billion for Europe. 53% of US structured products were equity linked, 22% were tied to fixed income and 26% were based on alternative underlyings. Sample findings of the survey can be found here.
Another interesting finding was that issuance in the UK and Italy contracted in 2006, compared to 2005. That tallies with the findings of The European Retail Structured Investment Products Market, an executive report published by Risk Books, Incisive Media’s book publishing division. In this report we found that UK issuance was down around 11% for 2006 compared to 2005.
Remember, however, that this report was researched in mid 2006. Now, it transpires, various market estimates suggest that the UK market ‘bounced back’ in late 2006, with around a 15% growth for the whole year. Next month Structured Products magazine will report on how the UK market is being revitalised…
Another interesting point of the Greenwich/SPA survey is that “continued growth depends on additional marketing and education – of both advisors marketing structured products and clients themselves – on the key benefits of using structured products as part of an investment portfolio.”
This doesn’t just apply to the US market – all markets should take note…