Investment opportunities in an environment of persistently high interest rates was among the topics discussed during SRP France 2026, which was held in Paris on 20 May.
Olivia Rivet, CFA, member of the French society for fund selectors independent member of the nominating committee, CFA Society France, who acted as moderator, kicked off the discussion by asking how the favourable interest rate environment of the past four years has impacted the structured products universe.
Many reputable issuers are offering fixed income products, and bonds have maintained their dominant position - Victor Toulouse, BNPP AM
“[The high interest rates] have allowed for much more flexibility when it comes to structuring different products,” said Victor Toulouse, senior portfolio manager, BNP Paribas Asset Management.
Initially, Toulouse had expected a return to equity products with a change in volatility, but that did not materialise at all.
“Many reputable issuers are offering fixed income products, and bonds have maintained their dominant position,” said Toulouse who highlighted three main developments: the integration of derivatives within indices; objectively quantifying the fees included in indices; and greater transparency in pricing stability.
Left to right: Olivia Rivet, CFA; Victor Toulouse, BNP Paribas Asset Management; Nathanael Gabay, Zenith Capital; and Jeremy Dominh, STS Digital.
Nathanael Gabay (pictured), head of the external distribution, Zenith Capital is not in favour of pitching fixed income products against equity-linked products.
“Each has its role in an asset allocation, and each meets different client needs,” he said.
Today, the risk premium is more about explanation, education and client support than about product selection - Nathanael Gabay, Zenith Capital
Whereas previously, the first question asked by investors would be ‘What is the return?’, the past 12 to 18 months has seen as shift, according to Gabay.
“Clients want peace of mind. They want a product that allows them to absorb a market downturn without the end-investor panicking.
“Today, the risk premium is more about explanation, education and client support than about product selection,” he said.
The current interest rate climate also offers opportunities in the crypto market, according to Jeremy Dominh, head of crypto structured solutions and QIS senior representative STS Digital.
“We are seeing a lot of interest in crypto fixed income […] obviously, with higher rates, people expect higher returns, but they don't necessarily know where to allocate their money,” Dominh said.
Jeremy Dominh, STS Digital
Rivet asked panelists about client preferences, especially concerning long- and short-term interest rates.
During the past year or so, we have noticed a decoupling between crypto and the stock market - Jeremy Dominh, STS Digital
Education about the underlying asset is key, according to Gabay, who emphasized that he had no doubt the professionals in the audience understand what the constant maturity swap (CMS) rate is, it might be less easy to explain to a financial advisor, who himself has an end client who might be a doctor, lawyer or business owner.
“I'm not even talking about the dynamics of the rate if there's a change in the macroeconomic regime, if there's a volatility shock,” said Gabay who added that the landscape regarding rates, which were previously focused on long-term rates has somewhat shifted towards slightly shorter-term rates.
“We've also seen products based on the OAT, the French Treasury bond, which are simple enough that everyone can understand them,” he said.
With opportunities in more traditional asset classes weaker than before, and clients not necessarily keen to enter at relatively low levels, cryptocurrencies offer a diversification opportunity compared to the stock market, according to Dominh.
“During the past year or so, we have noticed a decoupling between crypto and the stock market,” he said.
The audience at SRP France 2026 in Paris on 20 May
Dominh cited that in the current market, a classic reverse convertible on a single underlying asset such as Nasdaq or S&P could generate six to eight times the annualised return, with a barrier at 70.
“This is still decent, but considering the market risk, it’s not necessarily the most attractive, whereas if we invest by making a reverse convertible on Ethereum or Bitcoin, we reach 18 times the return with a barrier at 70,” he said.
For the past few years, conditions have been quite optimal, added Gabay.
“We have rates that are above three, volatility that's around 18-20, which is at a very reasonable level, and credit spreads that are quite low, so we have the opportunity to create truly attractive products – whether they are defensive or dynamic.”
Rivet highlighted that there are multiple structuring possibilities with attractive risk premiums, providing that investors remain selective and diversified.
“This diversification also allows for the provision of relevant solutions for clients,” she concluded.
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