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Sector is showing its value

Structured product providers say they offer a level of certainty which cannot be offered by other investments.

Speaking at a Money Marketing round table, Morgan Stanley vice-president of UK structured products Marc Chamberlain said structured products are not vulnerable to underperformance by active managers and the risk and reward are known from the outset.

He said: “You have a level of certainty of where you are going to go and what you are going to get. In the alternative space, the performance of funds of hedge funds is bad and absolute return funds are having a shocking time.

“If you are cognisant of the risks, then structured products are still a good story from an asset allocation point of view.”

Blue Sky Asset Management chief executive Chris Taylor said the potential returns of structured products outstrip the performance of more traditional investment solutions.

Taylor said: “If you look at the Investment Management Association’s sectors, the one-year performance-related losses show why there is value in structuring. “The best retail income fund managers over the last year have delivered 30 per cent performance-related losses and the worst have delivered 50 per cent performance-related losses.

“The risk management techniques of the mutual fund world are nothing more than claims and promises and do not deliver what they say on the tin.”

Chamberlain claimed that active management and structuring are not mutually exclusive and investors should consider combining both to optimise asset allocation.

He said: “If you look under the hood, some of these mutual funds have structures in them. Some people put an actively managed fund next to a structure to incorporate an element of protection.”


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