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AWD insists on AA rating for counterparties

AWD Chase de Vere has written to structured product providers stipulating that a counterparty credit rating of AA or above is now required for inclusion on its investment panel.

Senior manager Jason Walker says: “The whole point of a structured product is to provide a degree of protection and reduce the risk of investing in the markets. You therefore need to make sure the counterparty has the financial security to back that up.

“When we do our due diligence, one of the criteria we look at is financial strength. The financial strength is based on the counterparty and it would need to be AA rated. If the product does not meet the criteria, we will not put it on the panel for use.”

Blue Sky chief executive Chris Taylor says further due diligence on a counterparty’s credit strength is necessary. He says: “It is not as simple as saying all AA rated counterparties meet minimum criteria and all A or lower rated institutions do not.”

However, he says: “There will be lines drawn in the sand in terms of minimum levels that intermediaries and investors look for and those lines are likely to be AA rated on openly offered, generally marketed retail plans.”

Lowes Financial Management says all structured product boutiques with the exception of Dawnay Day Quantum have used A rated counterparties to back plans.


Judging the turn

The Resolution Argonaut European alpha fund managed by Barry Norris has an outstanding record. Norris started his career with Baillie Gifford and spent some time with Neptune where he ran the European opportunities fund. He then decided to start Argonaut Capital Partners in 2005 with Oliver Russ.


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