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Credit risk main deterrent to structured products, says survey

Fifty eight per cent of advisers rank credit risk as the main reason why they would never or rarely recommend structured products to clients, according to a survey from Morgan Stanley.

The survey of just over 100 financial advisers revealed that 16 per cent cite not liking the products on offer as the key reason against investing in structured products.

Eight per cent cite a lack of interest from clents and 5 per cent a lack of understanding as why they would not invest in them.

Nevertheless, the survey reports that 76 per cent of financial advisers rank structured products as their preferred investment type when recommending investment options to clients.

This represents a 21 per cent increase from December 2008 when structured products ranked third behind bonds and mutual funds.

Forty five per cent of advisers have been more inclined to recommend structured products in the past six months, compared to 40 per cent in December 2008.

Of those that recommend structured products capital protected products are the most popular with 86 per cent, followed by kick out features, 79 per cent and fixed term products, 71 per cent.

Fifty six per cent of respondents would recommend products with a level of soft capital protection but only 33 per cent of respondents would recommend a product with no capital protection at all.

Executive Director Marc Chamberlain says: “The survey results indicate a much bigger appetite than we expected among financial advisers for structured products and are also extremely encouraging news for providers.”


Growing pains

There has been no stopping this market – or these markets, it would be more correct to say. The bounce in the UK was approaching a third over less than six months last week. In some markets, it was even greater. This prolonged period of appreciating share values has given rise to a new phrase – the pain trade.

Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.


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