Target Group's Hartmoor Financial has officially entered the UK structured retail products market with its first two products, the Hartmoor Financial FTSE 100 Kick Out Deposit Plan 1 and the Hartmoor Financial FTSE 100 Deposit Growth Plan 1.
The new product manufacturer and provider of third-party administration has teamed up with Aldermore Bank as deposit taker of its range of retail structured deposits, which will be distributed via independent financial advisers (IFAs).
Hartmoor's focus on structured deposits represents the first time a UK provider has challenged Investec's dominant position in structured deposits over the past seven years. For products to be successful and compete in this area, you need to join efforts with strategic partners that can add value to your offering, according to Mike Newman (pictured), director of structured products at Target Group. "We strongly feel there is a need for an independent provider who is focused on simple, well-researched product ideas and giving great customer service," said Newman. "Our goal is to design products that meet genuine customer needs and put the customer at the heart of everything we do."
Ross Trotman, head of product structuring at Hartmoor Financial said, "they offer competitive returns and a credible alternative to traditional fixed rate bonds. The recent drop in the FTSE clearly gives a lower strike level, around 1,000 points below the highs in April last year, and this may be a catalyst for those who have been waiting for a drop to enter the market."
Hartmoor is also seeking to capitalise on its partnership with Aldermore Bank, and entice investors already using structured deposits by providing diversification in the structured product market with a new bank. "We see these products as giving more choice to customers, yet keeping the familiarity of trusted payoff profiles."
The company plans to focus on underlyings that are familiar to users of retail structured products in the UK , and will respond to demand from intermediaries to build up its offering. "It's unlikely that we will look away from the FTSE 100," said Trotman. "It's a well-accepted and understood benchmark, and we want to enter the market with as simple product shapes as possible to ensure they are well understood. We are looking to engage regularly with the intermediary market and customers to offer exposure to alternative asset classes that they have a demand for."
The FTSE 100 Kickout Deposit Plan one is a six-year structure that offers the potential for early redemption from year three onwards if the underlying level is at or above its strike initial level, and will pay a fixed return of 4.25% per year elapsed; while the FTSE 100 Deposit Growth Plan 1, is also a six-year play that will pay a return of 31% at maturity as long as the underlying level is at or above 90% of its strike level at maturity. "The option for retail investors to diversify their structured investment portfolio across a range of counterparties remains one of the many advantages offered within the UK industry, and as a recent new member to the UKSPA, we very much welcome the announcement that Hartmore have launched a new range of structured deposits into the market, wishing them every success," said Zak de Mariveles, chairman of the UK Structured Products Association.
Hartmoor will be launching back to back product tranches to ensure it always has available products for the market.
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