Once again Stoxx is topping the end-of-year underlying rankings in the global structured products market with its Eurostoxx 50 flagship which is the most featured single index across markets appearing in over 2,100 products worth an estimated US$20.5bn in assets. SRP spoke to Matteo Andreetto (pictured), chief executive at Stoxx, about the index provider's plans for 2018 and how the iStoxx range has been key to bolster Stoxx's presence in the structured products market over the last two years.

According to Andreetto, 2017 has been an important year with the ongoing switch from active into passive investment "becoming a trend in asset management" with €300bn of outflows shifting from active instruments going into passive in 2016, and €400bn at the end of September.

"The fact that so much money flows into ETFs is a strong indicator of this," says Andreetto. "ETFs are liquid and transparent. Creating passive investment solutions, which are concept build on transparent and rule-based strategies that are affordable and deliver long-term returns and generate value look like the perfect solution."

However, according to Andreetto, to achieve this is challenging as "on one side there is this massive cycle of growth and we are in the middle of this ecosystem, and on the other side we really have to keep designing, keeping the interest of investors as your priority, making sure that we have the best possible solution because it is impossible to control all the data".

The active to passive shift was accompanied by a number of initiatives aimed at increasing the index provider's footprint in Asia Pacific as it seeks to tap into 'significant opportunities in the smart beta space in that region', according to Andreetto. "We believe we have the right technology, and the right framework to be successful there," he says. "We are also working to leverage the cooperation we have with our local partner in Japan, MUTB, and in Taiwan with Yuanta."

Stoxx appointed in late November Rick Chau as the new head of Asia Pacific which followed the launch of its new office in Hong Kong in June 2017, and the licensing of the iStoxx Asia Pacific Quality Dividend Index to Yuanta Securities Investment Trust Company in March.

The US market is also a target for the index provider, which expects to double its assets under management there over the next five years, according to Andreetto. "Structured products in the US is also a natural space for us to be in," says Andreetto. "The growing interest and education that index providers and banks are putting into the market in terms of what structured products can offer in the portfolio of financial advisers is encouraging and the basis for growing the market further."

According to Andreetto, the strategy going forward will have the iStoxx family of indices in the spotlight as it is the series of indices where Stoxx combines its "own ideas, the interest of the clients and potentially multiple different data sources" and then optimises them to be used in structured products.

"These indices have been extremely successful in the market over the past 1.5-years," says Andreetto, adding that among the current market trends, smart beta continuous gaining traction in Europe, not only through the ETF market but also through structured products. "The three main trends at the moment are around factor, ESG and thematic investing."

When it comes to factor investing, Andreetto points that over the last years investors have got a better understanding of the characteristics of the products, such the risk/return ratio.

"In addition, investors have some specific target views of this concept," says Andreetto. "Consequently, we have really built a set of solutions for the entire market around factors this year."

Related stories:
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Stoxx expands Asia-Pacific presence with new Hong Kong office

Yuanta licenses Stoxx gauge to deliver Taiwan's first Apac smart beta tracker

Smart-beta products will appeal to many Taiwanese investors, MUTB

Stoxx increases focus in Apac, Eurostoxx 50 enters Taiwan via Yuanta tracker