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SPA Conference: Convergence is happening, fund experts, structurers say
By Emma Trincal
New York, March 25 - Progressively, mutual funds, exchange-traded funds and unit investment trusts have gravitated toward structured products and the convergence between the two universes is little by little happening, experts said at the Structured Products Association seventh annual conference in New York City Thursday.
The convergence update panel took a snapshot of this long-awaited trend, whose development is key for the growth of the structured product industry.
Two sides of convergence
"We definitely see more convergence between structured products and funds," said Samson Koo, head of equity structuring in the Americas at Barclays Capital.
"We already see a lot of examples of structured products with fund-like economics, for instance the iPath S&P 500 VIX exchange-traded notes, the Prosper notes referencing a basket of ETFs or fund-linked CDs.
"It's the other direction that's tougher: 1940 Act fund platforms offering structured products-like economics, because of legal and regulatory constraints. However, there are a lot of opportunities once we can overcome these obstacles," Koo said.
ETF marketing power
In some cases, for instance with ETFs, convergence is facilitated by the popularity of the underlying, according to Ben Slavin, director of product and business development at Wisdom Tree.
"We're seeing quite a lot of people on structured products desks looking to partner with ETFs sponsors to use ETFs as the baseline for new products," said Slavin.
"They're also looking to capitalize on the marketing success of ETFs as ETFs have a lot of appeal especially in the retail space," he said.
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