LCL has dominated the retail structured products market in France in terms of sales over the last few years, becoming the largest distributor in the market in 2017, with a 18.8% market share on the back of 22 products that raised €2.74bn, according to SRP data. The success of the products launched in 2017 is linked to strong demand for investment solutions offering conditional [knock-in barrier] protection of the capital, according to Yannic Raulin (pictured), deputy head of the structured solutions at Amundi, the structuring entity behind 47 structured products, distributed via Credit Agricole's retail networks, LCL and LCL Banque Privee over the year.
"The good commercial dynamics of the LCL networks was bolstered by maturing and well-performing LCL structured funds and medium-term notes," said Raulin. A dozen expiring products for an outstanding amount of over €2bn made 2017 an intense year for the LCL network, according to Raulin. "Investors have praised these structures returning between 4.8% pa and 7% pa, and logically wished to reinvest in similar payoffs."
Short investment terms and early exit possibilities, combined with attractive pay-outs [known in advance], and soft protection is what makes the French bank and insurance company's offering particularly valued, according to Raulin. SRP database shows an average investment term of 5.9 years for LCL's products launched in 2017 compared to 8.4 years for the whole market in France.
The best-selling LCL product last year was LCL Triple Tempo AV (October 2017), a six-year fund which collected sales of €375m between October 19 and December 7. An early exit feature would be triggered on the second or the fourth anniversary of the product, if the Eurostoxx 50 index remains stable or above its strike level (the average of closing prices registered on December 28, 29, 2017 and January 2, 2018 (3,506 points)). If the product continues to maturity, an overall return of 130% will be secured, even in the case of a 10% fall in the underlying.
Another high-seller, the LCL Double Horizon (September 2017), a four-year fund with one-off autocallable feature [on the second anniversary], raised €370m, and LCL Latitude 2017, a five-year fund, raised €260m.
LCL is also the largest distributor of formula funds in France, accounting for 46% of the sales of all structured funds marketed in 2017. New sales of structured funds in the French market totalled €4.8bn from 56 formula funds in 2017, a 47% increase from €3.3bn (51 funds) striking in 2016, but down from the 72 funds worth €5.8bn launched in 2015, according to SRP data. Other distributors of funds last year included Banque Populaire Gestion Privée, BNP Paribas Investment Partners, Credit Agricole, Credit Mutuel - CIC, Credit du Nord, Federal Finance Gestion, Louis Capital Market, Natixis Asset Management and Societe Generale.
With a few exceptions, LCL funds are marketed in a double wrapper, notably as a life insurance and a savings plan (PEA) wrapped product. "Our strength in 2017 was to offer a comprehensive range of products eligible for the two wrappers, thus meeting investors' particular needs," said Raulin.
Amundi has led the sales in France as a manufacturer, holding a 32% share of the retail market in 2017, according to SRP data. Thirty-five of Amundi's products in 2017 were linked to indices, including the Eurostoxx 50 (32 products), Cac 40 (two) and Europe US Qualite Index (one); eight were linked to a basket of shares; and five to a real estate collective investment funds (Immanens OPCI).
"Investors tend to favour short maturities, with capital protection and a clear indication of the expected performance objective," said Raulin. "Given the rising markets and the early expiry of a number of soft protected autocallable products, clients would rather reinvest in similar structures. From that perspective, we see innovation mainly in underlyings, as well as in the services support."
Rather than being fixated on a specific underlying or payoff, the bank's strategy consists of leveraging its close proximity to partner networks in order to provide them with solutions that best meet end clients' needs, according to Raulin.
At a company level, Amundi has concentrated on supporting its partner networks, whether with the implementation of the new Priips and Mifid 2 regulations, or aftersales service, according to Raulin. "This has been, recently, the case for systems designed to manage our products maturities," he said. "The systems have been set up in collaboration with Amundi's distribution networks to facilitate the roll-over process of expiring products."
LCL is marketing three products, all linked to the Eurostoxx 50, including LCL Autocall Vie 2018, a six-year fund, with semi-annual windows for early redemption.
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