So argues Brian McMillan, head of Structured Products Sales at Investec Corporate and Institutional Banking. Speaking at a recent panel discussion hosted by S&P Dow Jones Indices, McMillan said that the investment class has gained a great deal of acceptance among investors and financial advisers alike, for their ability to provide access to different global indices, themes and currencies.
In particular, noted McMillan, financial advisers are increasingly looking to vehicles like structured products and investments to implement the strategies they’ve designed on behalf of their clients.
Structured products give access to different global indices, themes and currencies.
Brian McMillan, Investec Structured Products
Using structured products under Regulation 28
For example, a retirement annuity provided by a linked investment service provider (LISP) can include structured investments to satisfy the offshore diversification requirements under Regulation 28. He expected that the use of structured investments within retirement vehicles under Regulation 28 was likely to grow.
“The use of globally recognised indices (like the S&P 500), that these products are linked to, gives peace of mind to the intermediary who doesn’t want to select specific offshore shares or funds,” said McMillan.
“It makes it easier for the intermediary to advise and manage the overall investment on behalf of the client. The intermediary’s client gets immediate offshore access and diversification, while the intermediary maintains the ability to service the client’s needs holistically , without having to pass on the investment to a third party investment house.”
The case for investors was a strong one, said McMillan. “The costs of a structured investment stack up well when compared with other offshore investment products. And, as long as structured products / investments within retirement products like living annuities deliver on their outcomes, they should grow in popularity,” he said.
“I expect regulation to also adapt to this growing demand and application of structured investments,” concluded McMillan.
Corporate and Institutional Banking, a division of Investec Bank Limited. Reg. No. 1969/004763/06. An Authorised Financial Services Provider and registered Credit Provider. A member of the Investec Group.
About the author
Patrick writes and edits content for Investec Wealth & Investment, and Corporate and Institutional Banking, including editing the Daily View, Monthly View and One Magazine - an online publication for Investec's Wealth clients. Patrick was a financial journalist for many years for publications such as Financial Mail, Finweek and Business Report. He holds a BA and a PDM (Bus.Admin.) both from Wits University.
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