Welcome to this month’s edition of Specialised Investments Simplified! This November, we’re diving into the evolving landscape of specialised investments, with insights on ESG-linked innovations, disruptive ETFs, collateralised loan obligations (CLOs), and the persistent dangers of crypto fraud.
The Rise of ESG-Linked Investments
Environmental, Social, and Governance (ESG) investments have become a cornerstone of sustainable financial strategies. A standout example is Société Générale Private Banking’s Cristal Solidaritéstructured product, a 10-year initiative integrating social and environmental impact into returns. By allocating a portion of investment gains to philanthropic causes, it demonstrates how structured products can align profitability with purpose.
In private equity, ESG-linked subscription lines are transforming financing approaches. These innovative loans align funding structures with measurable sustainability KPIs. For example, Bridgepoint Credit rewards diversity in management teams and incentivises renewable energy transitions.
However, navigating ESG investment products comes with its challenges. Financial advisers must contend with varying global standards, ever-changing regulations, and the need for adaptable KPIs. Tools such as Bridgepoint’s ESG framework and third-party certifications are becoming essential in ensuring credibility.
💡 Advisory Opportunity: Looking to include ESG investments in your advisory services? We Complement provides guidance and resources to integrate sustainable solutions into your practice effectively.
Crypto Fraud: A Sobering Reminder
Innovation in the financial sector often comes with risks, as illustrated by a recent UK case involving a £1.5 million crypto fraud. Using professional websites and cold calls, two fraudsters duped over 65 victims with promises of high returns.
The Financial Conduct Authority (FCA) has been at the forefront of combating such scams through initiatives like ScamSmart, which offers tools for identifying fraudulent schemes. Steve Smart of the FCA advises:
“If you’re contacted out of the blue about an investment opportunity that sounds too good to be true, then it probably is. If in doubt, don’t invest.”
For financial advisers, staying informed about emerging scams and educating clients is crucial. Building awareness around resources like ScamSmart can help protect your clients from becoming victims.
💡 Protecting Your Clients: Enhance your fraud prevention strategies with expert support from We Complement. Let us help you build trust and security in your advisory services.
ETFs Disrupting Structured Products
Exchange Traded Funds (ETFs) have redefined traditional investment strategies and are now challenging the dominance of structured products. Buffered ETFs, which provide downside protection, and covered-call ETFs, which offer income generation, are prime examples of this innovation.
Matteo Andreetto of State Street Global Advisors predicts a future where structured product benefits, such as capital protection, will be fully integrated into ETFs. These products promise not only cost efficiency but also enhanced transparency, making them attractive alternatives for wealth managers and financial advisers.
With structured product issuance reaching $80 billion annually in the US and Europe, the emergence of bespoke ETFs is a sign of adaptability in the financial sector. These tailored solutions offer financial advisers a way to meet client-specific needs more effectively.
🔗 Discover the future of ETFs
State Street Global Advisors gears up for new ETF disruption
💡 How We Can Help: Explore ETF trends with We Complement, and learn how to incorporate these solutions into your client portfolios.
Collateralised Loan Obligations: Liquidity Meets Complexity
Collateralised Loan Obligations (CLOs) are gaining traction in Europe, marked by the debut of the Fair Oaks AAA CLO ETF. While CLOs have a strong foothold in the US, where they attracted $8.3 billion in inflows during the first half of 2024, their complexity has historically limited their reach in Europe.
CLOs pool corporate loans into tranches, offering varying levels of risk and return. Despite perceptions of complexity, AAA-rated CLO tranches boast an unblemished record, with no defaults since their inception in 1997.
The ETF structure makes CLOs more accessible to financial advisers and institutional clients by offering liquidity, transparency, and lower minimum investment requirements.
🔗 Learn more about CLO ETFs
Europe’s first collateralised loan ETF listing overcomes concerns
💡 Empower Your Practice: Interested in introducing CLOs to your offerings? Let We Complement guide you through the nuances of these sophisticated asset classes.
Digital Assets in Structured Products
The digital finance revolution continues to expand, with Hong Kong’s Victory Securities receiving approval to market virtual asset-linked structured products. As the first broker licensed by the Securities and Futures Commission (SFC) for such offerings, Victory Securities caters exclusively to professional investors, signalling a growing regulatory focus on high-net-worth clients.
Elsewhere, UBS Asset Management has launched a tokenised investment fund, showcasing how blockchain-based assets are reshaping the investment landscape. Tokenisation offers significant potential to improve liquidity, transparency, and efficiency in traditional finance.
🔗 Stay informed about digital asset trends here.
How We Complement Supports Financial Advisers
From ESG-linked investments to ETFs and digital assets, navigating the complexities of specialised products can be daunting. That’s where We Complementcomes in. We partner with financial advisers to simplify investment strategies, empower your team, and help you deliver exceptional client results.
📧 Get in Touch
- Email: hello@wecomplement.co.uk
💡 Let’s Collaborate: Ready to expand your knowledge and enhane your practice? Contact us today to see how we can support you!
