Structured Product Review Service
structured product review service allows advisers and investors to monitor
structured products over time and work out if they remain suitable and
appropriate for the investor.
To access the service please register here.
developed a simple ranking system so it is easy to identify the products that
may not be suitable and appropriate anymore. Each product is given a Cube score
for risk and return and an issuer score.
is based on the average return investors can expect if they hold the product to
the maturity date:
if the expected return is higher than 4%
if the expected return is between 0% and 4% per annum
if the expected return is negative
is based on the expected volatility of returns so the risk score can be mapped
against most of the common attitude to risk scales:
if volatility is less than 10% (SRRI score 1 to 4)
if volatility is between 10% and 25% (SRRI score 5 and 6)
if volatility is higher than 25% (SRRI score 7)
is based on the Credit Default Spread (CDS) of the issuer and the recent change
in the share price and the level of the CDS:
have a score from A to F based on the CDS. A score of F indicates that the
issuers CDS is higher than 2% per annum
first +/- is based on the recent change in the issuers CDS. A + score indicates
that the CDS is falling, a – score indicates that the CDS is increasing
second +/- is based on the recent change in the issuers share price. A + score indicates
that the share price is rising, a – score indicates that the share price is
CREATING YOUR REPORT
All we need
to create your report is a list of the products your clients hold with the
Name, we need the full name including the version
You can add
products to your report at any time, simply send us the details of the
have the details of the products you hold we will create a list of your
products. We will send you spreadsheet with the risk and returns scores for
each product each quarter or more frequently as required.
We will send
you a link that you can use to download the risk and return rating of each
product directly from the internet. You can use the link in an Excel sheet as well.
Our ranking is updated every week for every product so you can access the
analysis when you need it.
report will give you the following information:
If you want
more information than we show on the basic report we can create a bespoke
report for you. The bespoke report can include the following information:
A timetable of income and
timetable means you can keep on top of what is happening. We show the
probability of each event so you can focus on the things that are most likely
calculate the fair value of most products. This can be particularly important
if you have clients that want to sell a product before the maturity date. You
can use our estimate of the fair value to check that your client receives a
reasonable price for the product they sell.
We show the
detail behind our return score:
and scale of a gain.
Comparison with other
the expected return with the Benchmark Return, this is a combination of FTSE
and cash with the same level of risk.
Attitude to risk
We can show
the detail behind our risk score :
Capacity for Loss
show the chance and scale of loss
show the chance of a large loss (we define this as a return lower than -10% per
show the “worst case” value. This is the average of the worst 10% of the
results from our stress test.
WHY REVIEW PRODUCTS?
structured products are sold as buy-and-hold products where the investor is not
expected to look at a product after they have invested until it matures. But
this is not always the best thing to do. All product providers offer an ability
to sell a product before the maturity date, and this can be a useful feature
for investors. There are several good reasons to sell a product before the
of the rise in the level of the underlying market, the price of many products has
increased significantly. Thus, the return from now to the maturity date may be
very low, investors may get a better return selling the product they own and
reinvesting in a new investment.
markets fall, the volatility of a structured product can increase. If the
expected volatility rises significantly the product may no longer match the
investors attitude to risk.
markets fall, the chance of a large loss when the product matures can increase
significantly. Is this level of risk consistent with the investors capacity for
loss? Even though the price of the product may be less than the investor paid,
selling the product they hold, and buying a new, less risky product may be
investors are aware of the risk that the issuer may default. Although this is a
very rare event a default can be catastrophic. If the credit quality of the
issuer has deteriorated increasing the risk of default investors may want to
sell and eliminate their exposure to the issuer defaulting.
To access the service please register here