Launch of industry 'first' structured product fund

RNS Number : 2603P

Mattioli Woods PLC

16 November 2016

 

PRESS RELEASE

16 November 2016

MATTIOLI WOODS HAILS LAUNCH OF INDUSTRY 'FIRST'

WEALTH management specialist Mattioli Woods is set to launch a ground-breaking initiative the company predicts could yield substantial cost savings and better returns for investors.

The firm will unveil its structured products fund later this month (November) in a move it has hailed as hugely significant for the financial services sector.

It builds on Mattioli Woods' long-standing track record, managing more than £100 million in structured investments which have provided average returns of more than six per cent per annum.

For the first time, its pioneering new approach will make it as easy for clients to buy and sell structured products as ordinary shares.

Other significant changes include:

·     GREATER SECURITY

The assets of the fund are secured by government bonds. Previously, investors were fully exposed to the bank providing the structured product. If the bank became insolvent, all the investor's money could be lost

·     IMPROVED INVESTMENT PROCESS

The old structured product arrangement meant investors could only buy structured products during a sales period (typically six to eight weeks before launch). The new fund will be continuously available

·     INSTANT DIVERSIFICATION

The new fund offers immediate access to a diversified portfolio of structured products. In the past, the same portfolio would have taken more than a year to put together

·     HIGHER POTENTIAL RETURNS

Reduced costs achieved through the fund could potentially yield improved outcomes for investors

Ian Mattioli, Chief Executive of Mattioli Woods, said today: "It is a major step forward for us in achieving a better solution at a cheaper cost for our clients, which in turn improves the prospective return.

"The fund reduces costs by charging less than individual plans have done historically. We believe cost savings to clients will be significant".

The new fund will be rolled out on November 28 after being recognised by the UK's financial regulator, the Financial Conduct Authority (FCA).

It will be overseen by two investment advisers, who will create a structured product portfolio, and a structured product fund committee with independent oversight to review the risk and returns of the fund.

It was developed in association with Commerzbank AG, a leading international commercial bank with branches and offices in more than 50 countries.

Mr Mattioli said: "With cash deposits delivering low or non-existent returns, we believe there is a place for structured products, particularly in uncertain markets.

"The scheme also further de-risks investment because, by having a much larger number of plans in the fund, we can spread risk more appropriately". 

Mattioli Woods has medium-term plans to grow the fund to £175 million to £200 million.

Mark Fuller, Head of Structured Products, said: "We are always looking to improve the products we can offer our clients and the new structured products fund significantly enhances our existing structured product proposition.

"We believe that investing in our structured products fund is the best way to gain exposure to this asset class".

The move comes 11 years after Mattioli Woods first distributed structured products to its clients.

Mr Fuller added: "In future, we expect similar funds to be launched, given the substantial advantages the Mattioli Woods Structured Products Fund has over other ways of investing in structured products.

"The fund will complement and strengthen Mattioli Woods' investment proposition, which includes its real estate investment trust (REIT) and discretionary fund management (DFM) offerings.

"In a sentence, we are significantly enhancing the way our clients can buy and sell their exposure to structured products".

WHAT ARE STRUCTURED PRODUCTS?

Structured products are generally a type of fixed-term investment where the amount you earn depends on the performance of a specific market (such as the S & P 500 index) or specific assets (such as shares in individual companies).

They offer the potential to earn attractive and clearly defined returns.

They are bespoke investment vehicles, either tailored to meet the aims of an individual, or intended for a general retail offering, but with a risk/reward profile designed to achieve a specific set of objectives.

Typically, these objectives will combine an element of capital protection with a degree of participation in the return from an underlying asset.

As with investments in general, past performance is not an indication of future returns. Investments can go down as well as up and you may not get back the original amount invested.

STRUCTURED PRODUCTS: AN EXAMPLE

Underlying asset: S & P 500 index

Maturity: Six years

Return: 32% if the S & P 500 index is at or above its starting level on the maturity date

Risk to capital: If the S & P 500 index is lower than 50% of its start level at maturity.

CASE STUDY

Client A

Amount invested in SP plans: £381,000, around 20% of a wider portfolio

Number of plans: 40, which creates diversification but causes an administrative burden that the new fund will remove, and can be invested directly in the diversified structured products fund immediately

Note to Editors

·     Mattioli Woods employs more than 500 people throughout the UK at offices in Aberdeen, Glasgow, Preston, Leicester, Buckingham, Newmarket, Manchester, Solihull and London

·     It is one of the UK's leading providers of wealth management, including pensions consultancy, personal investment and estate planning.  It also offers employee benefits services to corporate clients, such as flexible benefits, workplace savings and ancillary schemes in the UK and globally

·     For all media enquiries, contact Kevin Booth, Press and Media Manager, at [e-mail] 

 

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