Many For Money, a French savings platform and specialist in life-insurance, has - in collaboration with Adequity - launched its first structured product available to its members. MFM Rendement 01/2017, an autocallable medium-term note (MTN), which has a maximum term of 10 years, is linked to the Cac 40. The product, which is listed on the Luxembourg Stock Exchange, is issued by SG Issuer, with Societe Generale the guarantor.
"MFM Rendement was launched in excellent market conditions, with virtually nil distribution fees and at a very competitive price," said Quentin Nansot (pictured), founder, Many For Money. The phoenix-type structure offers a potential annual yield of 5%, providing the French benchmark index does not close below 40%, which would means 2,700 points as of today, and, according to Nansot, "a 40% decrease on the Cac 40 allows investors to face a potential market downturn in 2017 while keeping good visibility on the coupon payments".
Although strategy indices (mostly represented by Euro iStoxx Equal Weight Constant (EWC) 50 and CAC Large 60 Equal Weight ER) have gained traction in France by adding 10% to their market share since 2015, the Cac 40 has held firm, featuring in 35 products during 2016 to date. "Distributors seeking to deal with the lack of favourable conditions (including low interest rates and volatility), are tempted to take additional risks by using fixed dividend indices," said Nansot. "The Cac 40 index (dividends not reinvested) is the most simple and readable underlying to offer to the French retail investors."
Many For Money was founded as a platform for bulk purchasing of financial investments in the broad sense, which are then offered to retail and professional clients, according to Nansot. "Structured products are, nevertheless, one of our specialties, given my previous experience [as director at Adequity until April 2016] and we are convinced of the relevance of this type of products for the investors," said Nansot.
To distinguish itself from its competitors, Many For Money put a strong emphasis on the transparency and consistently favours structures with reduced or zero distribution fees, according to Nansot. "Mechanically, we would not work with advisers and retail networks which are very demanding in terms of commissions," he said.
The company also offers deals on pre-collection to test the interest of a new formula with its members before issuance, according to Nansot: "This allows us to offer tailored solutions to the largest number of retail clients and professionals, and thus really respond to investor's demands," he said. Once the goal is reached, the company makes a call for bids with several trading rooms aiming to offer the best product at the best price.
The low interest rate environment continues to put pressure on investors and pushes them to diversify their portfolios. In a context when the capital guarantee comes at a cost, and the search for yield goes hand in hand with accepting some risk, the role of advisers proves essential when matching the suitability of a product to the retail clients' objectives, according to Nansot.
"Investors normally follow the advice of their financial advisers, who are themselves influenced by the market place's sales teams", said Nansot. "Our thinking is that, during 2017, investors should favour income products that distribute coupons. In the possible event of a market downturn in 2017, the 'Athena Autocall' structures will no longer be a sufficient solution."
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