Bank of Montreal Raymond James Analysts' Best Picks Notes - Share Basket (06367TQJ2) product was the bestselling product in the USA market during January. The product linked to a basket 17 shares comprising some US household names such as Halliburton Company, Microsoft Corporation, and Willis Towers Watson, among others, chosen by Raymond James Analysts, sold $310.24m.
This particular note wasn't designed as a solution for all clients but really to focus on a sub-set of Raymond James' clients, according to Eric Yates (pictured), head of structured products at the wealth management firm. "What we're trying to do is to provide advisers with research ideas, not necessarily a product, and when we market, we focus on the research as opposed to the product," said Yates. "The market has evolved and there is a drive from advisers to find more clients that are interested in our research versus trying to pitch a product."
The one-year synthetic structured note will pay 97% of the rise/fall of the underlying, where the initial level is the arithmetic average of the closing level on each of the initial four days of investment. The final level of the underlying is the arithmetic average of the closing level on each of the final four days before maturity.
The synthetic strategy that combines a long and a short option with the same strike and observations, result in replicating the underlying performance discounting 3% commission.
Usually, the investor uses these type of payoff when they can't replicate the underlying, if they don't want to hold the securities or the commission paid to the investment bank is lower than the commission in buying and holding the underlying.
"There is a different mind-set when it comes to structured products," said Yates, adding that the shift towards a more holistic approach has made a difference. "We are having success with an effort that is no longer product-driven but research-driven and we are marketing multiple solutions suitable for various accounts."
According to SRP database, there are 20 products linked to Raymond James Analysts in the USA database with a sales volume of $1.1bn. BMO has been using Raymond James analysts' best picks research since the beginning of 2014 when it sold the first tranche of the Raymond James Analysts' Best Picks Notes, an uncapped call/uncapped put structure that sold US$168m and matured delivering 105.093% / 4.91% p.a. to investors.
Other products in the US featuring Raymond James' research include the USD Certificates Linked to the Raymond James 2014 Internet of Things Certificates sold by BNP Paribas 2014, and the Raymond James Sustainability Equity Securities Linked Notes sold by TD Bank in 2016. Two of the firm's indices, the Raymond James CEFR Domestic Equity TR Index, and the Raymond James Analyst Current Favorites TR Index, have also been featured in structured notes marketed by Scotia Bank in the US market.
BMO Financial has marketed 45 structured notes in the US year to date including 34 by Bank of Montreal and Harris Bank. In 2016, the Canadian group finished in the top 10 US issuers table with overall yearly sales standing at US$1.1bn and a market share of 2%.
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