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Russian Structured Products Conference 2017
Moscow, May-17
Global Market Overview
All market statistics in this presentation are provided by www.StructuredRetailProducts.com
unless otherwise stated & subject to all terms & conditions displayed on our website.
Darina BachevaResearch Executive
I. “The Scramble for Alpha”▪ Demographics
▪ Challenges for Managed Investment Products
▪ Growth of Alternatives
▪ Building Outcomes
II. The Structured Products Market▪ Global Data & Trends
▪ Indexing
▪ Regulation
III. Banking on Technology▪ The Challenges
▪ The Opportunities
▪ The Future
2Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Contents
I. “The Scramble for Alpha”: Demographics
3
Growth of the Super-old…
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
4
Source: Financial Times
• Active shifting into passive.
• Race “against” technology.
• Lower profits caused by brain drain.
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Has Underperformance Caused Funds’ Failure?
5Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Rise of Passive
Data: Tranche Retail
Source: www.StructuredRetailProducts.com, ETFGI, EFAMA, ICI, Preqin
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2012 2013 2014 2015 2016
AUM invested by Types of Managed Products (USDbn)
ETFs (LHS) HFs (LHS) SPs (LHS) MFs (RHS)
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
6
“The Scramble for Alpha”: Economics
7
*SPs, HFs, FX, PE, commodities, derivatives
Source: World Wealth Report 2016
10.1% 13.5% 13% 15.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2013 2014 2015 2016
Breakdown of HNWI Financial Assets
Cash Equity Real Estate Fixed Income Alternative Investments*
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Growth of Alternatives
1. Lower Industry Growth
2. Product Performance Woes
3. Difficulty Creating Attractive Products
4. Accelerating Pricing Pressures
8Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Investment Industry Challenges
9
▪ Easy and quick way to express investment view
▪ Offer protection/yield
▪ Offer leveraged upside or downside protection
▪ Hedging tools
▪ Allow access to illiquid markets/asset classes/underlyings
▪ Predictable product fulfilling pre-existing formula - unlike
funds/ETFs
▪ But constant internal monitoring necessary to prevent “old habits”
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Benefits of Structured Products
1. SPs should be investments as part of a wider asset allocation strategy to be effective
2. Isolated investments are bets!
3. Investors should diversify in selection of structure and asset class
4. More due diligence and better research required around how SP underlyings fit within wider risk profile and asset allocation strategy of existing portfolio
Otherwise:
▪Wrong or ill-fitting products
▪Asymmetric risk exposures
▪Bad performance and client dissatisfaction
10Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Lessons Learnt
▪ Performance
▪ Outstanding Volume
▪ Sales by Region
11Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
II. Structured Products Global Overview
12
Data: Tranche Retail
Source: www.StructuredRetailProducts.com
2.79%
0.99%
3.66%
1.89%
6.92%
9.08%
0.06%
1.13%
3.36% 3.27%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
2015 2016
Europe North America Latin America APAC Global Average
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Average Performance by Region 2015-2016
13
• Stable AUM • Healthy rollover • Data excludes OTC trades!
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2011 2012 2013 2014 2015 2016
USD
bn
Europe
Americas
APAC
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Global Retail Market: Outstanding Volume
Data: Tranche Retail
Source: www.StructuredRetailProducts.com
14
0
50
100
150
200
250
300A
pr-
15
May
-15
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6
May
-16
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec
-16
Jan
-17
Feb
-17
Mar
-17
USD
bn
Europe
APAC
Americas
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Global Sales 2015-2017Q1
Data: Tranche Retail
Source: www.StructuredRetailProducts.com
15
0
20
40
60
80
100
120
140
2011 2012 2013 2014 2015 2016
USD
bn
Others
UK&Ireland
France
South Europe
CEE
BE-NL
NORDICS
DACH
European Sales Trends
Data: Tranche, Retail, in primary market
Source: www.StructuredRetailProducts.com
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
16
0
10
20
30
40
50
60
70
80
2011 2012 2013 2014 2015 2016
USD
bn
Latin America
Canada
USA
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Americas Sales Trends
Source: www.StructuredRetailProducts.com
Data: Tranche, Retail, in primary market
17
0
20
40
60
80
100
120
140
2011 2012 2013 2014 2015 2016
USD
bn
Others
Greater China
Japan
South Korea
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
APAC Sales Trends
Data: Tranche, Retail, in primary market
Source: www.StructuredRetailProducts.com
0%
20%
40%
60%
80%
100%
2011 2012 2013 2014 2015 2016
Comm. Equity FX IR Others*
18
• Equity: -6%
• IR: +39%
• Comm: +27%
• FX: -12%
• Others*: -1%
* includes: Alternatives, Credit, Funds, Hybrids, Inflation, Real Estate
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Global Sales by Asset Class (USDbn)
Data: Tranche, Retail, in primary market
Source: www.StructuredRetailProducts.com
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Indices by Sales as of end-2016Region 1st 2nd 3rd 4th 5th
EMEA STOXX FTSE Russell Euronext SolactiveS&P Dow Jones
Indices
Global StoxxS&P Dow Jones
IndicesFTSE Russell
Tokyo Stock Exchange
MSCI
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
12
20
13
20
14
20
15
20
16
20
17
Q1
20
12
20
13
20
14
20
15
20
16
20
17
Q1
20
12
20
13
20
14
20
15
20
16
20
17
Q1
EMEA Investors Americas Investors APAC Investors
Index Provider by Region
Americas APAC EMEA
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Source: www.StructuredRetailProducts.com
Global Sales of Regional Indices (USDbn)
20Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Regional Smart Beta Index Sales (USDmn)
Source: www.StructuredRetailProducts.com
Data: Flow, Tranche, Retail, in primary market
$ 8,740 mn
$ 6,777 mn
$ 7,788 mn$ 2,523 mn
$ 528 mn
$ 725 mn
$ 618 mn$ 304 mn
$ 160 mn
$ 267 mn$ 243 mn
$ 77 mn$ 85 mn
$ 136 mn $ 159 mn
$ 28 mn
75%
80%
85%
90%
95%
100%
2014 2015 2016 2017YTD
Middle East
Latin America
Asia Pacific
North America
Europe
21
$300 mn $55 mn
$155 mn
$29 mn $5 mn
$68 mn
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016
USD
mn
Americas
Europe
Data: Flow, Tranche, Retail, in primary market
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Source: www.StructuredRetailProducts.com
Global Investment in Russian Underlyings
22
Key Topics:
▪ Priips postponed to 2018
▪ IRS regulation under Section 871(m)
▪ US SEC amends listing standards to ETFs
▪ CLN investigation by BaFin and follow-up
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Regulation
23Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Regulation
▪ The Challenges
▪The Opportunities
▪ The Future
24Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
III. Banking on Technology
25
22%
58%
65%
52%
54%
27%
57%
75%
48%
73%
29%
55%
53%
54%
70%
26%
44%
27%
68%
69%
By Phone
ATM
On my Smartphone
In Person at the Branch
Online Banking
Interactions with Financial Institutions
Gen Z Millennials Gen X Baby Boomers
Source: The State of Banking 2016 Report
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Banking on Technology
26
Challenges:
▪Revenue Growth vs Commission
▪Fintech entrants disrupting traditional methods
▪Robo advisors offering low fee model – threat or compliment to current offering
Integration of Blockchain:▪ Cost efficiency▪ Transparency▪ Global Standardisation
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
The Future
27
▪ SIMON (Goldman Sachs) B2C:▪ Over 15,000 advisors today from 2,300 in 2015▪ 50,000 users by end-2017▪ > 18 brokerage firms onboard
▪ Deritrade (Vontobel) B2C:▪ Multi-issuer platform for financial professionals and insurers▪ Mifid 2-complient advisory and PF management tool
▪ Wunschzertifikat (Commerzbank, Boerse Stuttgart, OnVista) B2C:▪ 2 issuers – Commerzbank & Societe Generale▪ 5 product types▪ > 500 underlyings
US
EUR
OP
E
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Issuance Platforms – from B2B to B2C?
• Amareos• Sentifi• SRP?
Source: Deloitte
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
28
Big Data – Big Banks?
Copyright © 2017 Structured Retail Products Limited. All Rights Reserved.
Reproduction & distribution of this report in any form without prior written permission is strictly prohibited.The information contained herein has been obtained from sources believed to be reliable. SRP disclaims allwarranties as to the accuracy, completeness or adequacy of such information. Use of this report is at your solerisk & SRP accept no responsibility for any problems or incidents arising from its use.
Darina BACHEVAResearch Executive
Tiago FERNANDESGlobal Head of Data
Direct: +359 2 816 04 55
Direct: +44 (0)20 7779 8228Mobile +44 (0)7971 464509
Russian Structured Products Conference – May 2017 © Copyright Structured Retail Products a division of Euromoney Global Limited 2017
Questions?