29 Nov 2012, Juliane Bürger, Structured Products
In view of uncertain markets and the low interest policies of central banks, increasingly clear tendencies are emerging among investors actively seeking better return opportunities. Advisory customers are showing greater interest in simple products with a high level of security. At the same time, demand is on the rise for individual products that can be configured in just a few minutes with the help of the bank adviser. By contrast, self-guided private investors, along with traders, are deliberately taking on risk in an attempt to utilise short-term market fluctuations with leveraged products. This trend is confirmed by figures, released by the German Derivatives Association (DDV) on September 30, 2012, that showed structured bonds have a market share of 52.1% and equity-linked capital protected products account for 16.9% of the total. That represents 73% of all conservative investment products. In the certificate market, leveraged products have a market share of just 1.3%, but this product category generates more than 50% of total sales revenues.
As part of the European banking group UniCredit, HypoVereinsbank (UniCredit Bank AG) has pushed ahead with its development to provide optimal products and services for the various investor profiles. HypoVereinsbank now offers an extensive range of investment and leveraged products under the HypoVereinsbank onemarkets brand in Germany and under UniCredit onemarkets in Austria.
To develop security-oriented products with attractive interest payments, the cross-border infrastructure and the different capital positions of the banking group’s individual legal entities are utilised. In the area of structured bonds, for example, step-up bonds and inflation-linked bonds issued by UniCredit Bank Ireland in Dublin – whose bonds are guaranteed by the parent company UniCredit SpA – have been a focus this year. That means the investor has 100% capital protection barring a default by both legal entities, and receives regular interest payments. Another product not directly affected by stock market fluctuations are credit-linked notes (CLNs). By linking two risks – those of the issuer and those of the reference obligor – CLNs can often generate more attractive interest payments than pure interest rate products. Reverse convertibles with regular interest payments and partial capital protection have also been quite popular. HypoVereinsbank is the leading player in this area, with a 26% market share (according to DDV on September 30, 2012).
Individual and innovative – my.onemarkets
HypoVereinsbank has become Germany’s first branch bank to offer private investors the opportunity to build a customised investment product together with private banking advisers and investment experts in the branch. Starting at €20,000, my.onemarkets product configurator can create an individual solution. The investor can react spontaneously to market developments and invest in just a few minutes in the solution tailored even more individually to personal needs. The my.onemarkets investment universe includes reverse convertibles, express certificates, bonus certificates and reverse bonus cap certificates, and capital-protected bonds. Investors can choose from 135 different underlyings and can specify the issue date, the invested amount and various product characteristics such as maturity, return opportunities and risk appetite. For example, for a more security-oriented investor who wants the lowest possible security threshold, the maximum potential return will also be lower. As a result, numerous combinations are available to investors and can be defined with the help of an adviser. At the same time, the involvement of my.onemarkets in the advisory process ensures compliance with all regulatory requirements – the product-specific fliers and product information sheets are automatically generated and the adviser is supported in completing the advisory record. It is possible at any point in the product life cycle to retrieve information online using the international securities identification number. The product can be withdrawn within one market day.
Wider range of opportunities
Through the ongoing development of the product platform, HypoVereinsbank is in a position to provide up to 2,000 issues per day of investment and leveraged products for traders and self-guided private investors, in addition to the previous range of primary market offerings. More offensive investors always need up-to-date products specifically geared to current market prices such as warrants, open-end turbos and mini-futures. Issues of discount certificates have also picked up. Initially, the main focus has been on the German, European and major international equity indexes under heavy demand among investors: DAX®, MDAX®, TecDAX®, SDAX®, ATX®, Eurostoxx 50®, S&P 500®, Nasdaq 100® and the Dow Jones Industrial AverageSM. Single stock products are based primarily on German and European indexes, and the international portfolio will be expanded at a later stage.