Editor's letter

Efforts towards more coherent marketing principles and educating advisers - rather than increasingly fanciful underlyings or payouts - are surely more important for the future of the industry

While attending a conference recently, I was asked what interesting products I thought would soon be brought to market. I responded by saying it is all down to the creativity of manufacturers and distributors, which so far shows no signs of abating. Yes, I wimped out. But it really is becoming increasingly difficult to keep track of all the new payouts and underlyings that are being offered to retail investors. When Structured Products was launched almost three years ago, equity-linked products dominated the scene, and they all looked pretty similar. Now, though, investors are spoilt for choice.

In this issue, we review a product from Macquarie Bank linked to the growing freight derivatives market (see page 56). Such a product would have been unthinkable only a year ago. Products linked to carbon emission indexes are also gaining popularity with European investors, and UBS even thinks products linked to weather derivatives are a distinct possibility (see page 10). It's all about portfolio diversification and uncorrelated asset classes.

Even on the equity front, innovative products are coming to market thick and fast. Earlier this month, for example, a press release from UK distributor Dawnay Day Quantum arrived in my inbox claiming that its European Stockmarket Maximiser represents "a groundbreaking structured investment ... (representing) a new generation of structured investments offering returns which will beat the index return in nearly all possible scenarios."

That's all well and good. But how do marketers expect retail investors to understand these exciting new offerings? After all, delegates at conferences still debate how to boost the acceptance of structured products as a whole, and that includes the simpler products that have long been available.

Product acceptance rests on the shoulders of all structured products professionals. Thankfully, as we report on page 24, more coherent marketing principles and investment in educating advisers are finally making headway. Efforts in these areas - rather than increasingly fanciful underlyings or payouts - are surely far more important for the future of the industry.