The UK retail market may still be dominated by autocallables, but there have been developments in the underlyings used, as product creators look to variations of the usual FTSE 100 benchmark for issuance, according to SRP data. Aside from autocalls, the enhanced tracker and capped call have gained in popularity.
New autocalls issued in the UK in May include Dura Capital's FTSE 100 Booster Plan, which offers 210% participation in the UK benchmark index, capped at an overall return of 205%, if the underlying's final level is above 90% of the initial level, while Meteor is offering the FTSE 100 Defensive Supertracker Plan, a product that promises two times the performance of the underlying index above 75% of the initial level, subject to a maximum capital return of 150%.
Seventeen products were linked to single indices, most of which were the UK benchmark index. A UK market favourite, but there are variations, with a rising number of products linked to the FTSE 100 Fixed Dividend Yield Equal Weight Custom Index and FTSE Custom 150 Equally Weighted Discounted Return Index, according to the SRP database. The equally-weighted indices are alternatively weighted versions of the market-cap weighted index. At the regular rebalance, each company is given an equal weighting in the index, which is rebalanced in line with the share price.
Index baskets have also become more vastly popular and used in 103 products so far this year, against 61 over the same period in 2017.
Walker Crips and Investec were the most active distributors in May, with products including the Investec/Lowes 8:8 Plan 3, which is available to domestic investors but also non-UK tax resident investors in Jersey, Guernsey, the Isle of Man and corporates. The UK market has welcomed three new distributors this year: Augere, which launched earlier in 2018 as a new distribution outlet for Credit Suisse; Dura Capital, the retail arm of Catley Lakeman; and Tempo Structured Products, which started operations in early May.
Tempo is part of Alpha Real Capital Group and its first offering is a 10-year Long Growth Accelerator Plan, which comes with two options and is linked to the performance of FTSE 100 Fixed Dividend Yield Equal Weight Custom Index. Both plans are listed on the London Stock Exchange and can be redeemed early on the fifth observation date with 100% and 110% knockout levels and 55% and 85% capital growth, respectively. "Our entire product offering will be 'deliberately defensive', with very precise requirements regarding the defensive features, in order for us to launch strategies for public offer," said Chris Taylor (pictured), head of structured products at Tempo.
SG issuer, Natixis and HSBC issued four products each during May, while Morgan Stanley returned to the UK market after a two-year absence. In May, the US bank was the issuer behind Meteor's FTSE 100 Defensive Supertracker Plan, among others. Other issuers returning this year include Santander, which partnered with Investec and BBVA, and hedged products marketed by IDAD.
Twenty-four structured products from seven different providers were added to the SRP UK database in May. The products consisted of 22 medium-term notes (MTNs) and two deposit plans. Forty-one products from five providers struck during the month and another 43 reached their maturity.
Click the link to read the full UK market review for May.
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