Russian Structured Products Conference 2017 · Russian Structured Products Conference 2017 Moscow, May-17 Global Market Overview All market statisticsin this presentationare provided

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

http://www.structuredretailproducts.com/

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.


Has Underperformance Caused Funds’ Failure?


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)


6

“The Scramble for Alpha”: Economics

http://www.structuredretailproducts.com/

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*


Growth of Alternatives

1. Lower Industry Growth

2. Product Performance Woes

3. Difficulty Creating Attractive Products

4. Accelerating Pricing Pressures


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”


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


Lessons Learnt

▪ Performance

▪ Outstanding Volume

▪ Sales by Region


II. Structured Products Global Overview

12


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


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


Global Retail Market: Outstanding Volume



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


Global Sales 2015-2017Q1



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



16

0

10

20

30

40

50

60

70

80

2011 2012 2013 2014 2015 2016

USD

bn

Latin America

Canada

USA


Americas Sales Trends



17

0

20

40

60

80

100

120

140

2011 2012 2013 2014 2015 2016

USD

bn

Others

Greater China

Japan

South Korea


APAC Sales Trends



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


Global Sales by Asset Class (USDbn)



19

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



Global Sales of Regional Indices (USDbn)


Regional Smart Beta Index Sales (USDmn)


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



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


Regulation


Regulation

▪ The Challenges

▪The Opportunities

▪ The Future


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


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


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


Issuance Platforms – from B2B to B2C?

• Amareos• Sentifi• SRP?

Source: Deloitte


28

Big Data – Big Banks?

http://www.blackswan.com/

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

[email protected]

Direct: +44 (0)20 7779 8228Mobile +44 (0)7971 464509

[email protected]


Questions?

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Documents

Russian Structured Products Conference 2017 · Russian Structured Products Conference 2017 Moscow, May-17 Global Market Overview All market statisticsin this presentationare provided