Lower interest rates and confidence in Brazil's consumer sector has prompted HSBC to refocus its product line.
"The good thing is that as a result of the cut in interest rates, investors are looking for yield. They realise that structured products offer just this," head of multi-asset funds at HSBC Bank Brasil, Rodrigo Borges, told SRP.
The bank has recently launched a consumption-based structured product with plans to launch additional products with the same theme.
HSBC has decided to go with a sub-index comprising the MSCI Brazil and MSCI Brazil Consumer Staples indices for its latest offering, HSBC Fundo de Investimento Multimercado Smart Consumo.
"Our research team has positive thoughts on domestic consumption and we wanted an index targeting this sector that was also calculated by a third party," Borges said.
"We were given the option of a BM&F Bovespa consumption index but decided that not only are there too many stocks in this index but also many of those stocks are highly illiquid."
The eighteen-month capital-protected note offers full participation in the rise of MSCI Brazil Consumer Staples Index, subject to an overall maximum return of 120%.
"Eighteen months is a long time for Brazilian investors to wait for returns so we have spent a lot of time building a sales force which has been selling this product quite aggressively in order for clients to become more familiar with what they are buying," said Borges.
On average, HSBC Bank Brasil issues one structured product every two or three months so that clients can focus on one offering and become knowledgeable about its characteristics.
"This is a sophisticated product by Brazilian standards and must be addressed to clients in the right way," Borges added.