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SPA Conference: Commodity-linked structured products offer assets' strong performance to buyers, Camacho says
By LLuvia Mares
New York, Oct. 16 - Consistent positive returns make commodity-linked structured products an appealing option, according to Michael Camacho, managing director in structured investments at JPMorgan Securities Inc.
The underlying assets have been very successful throughout the years at generating positive returns, a performance that looks even better when compared with other markets, he said at the Structured Products Association's third annual summit held Tuesday at the Flatotel Hotel in New York.
"If you look at the years in which equities have posted negative returns, you will see that commodities have posted positive returns [in six out of the past eight years]," he said.
According to Camacho, there are three basic arguments to make to potential buyers when it comes to working with commodity-linked products.
"You have high returns, uncorrelated returns and inflation hedge," Camacho said. "Commodity markets have outperformed other markets on total returns."
Camacho said at the summit that investors are looking into a more representative exposure to community markets.
"Looking at the last year or so, it's been a typical boom bust cycle," he said. "I think that part of that story is also the fact that they were having a huge institutional demand for commodity-linked products which leads to looking at where we are now."
Camacho said if you look at the retail markets commodities has reeled in at least $60 billion.
"Investors are looking into more complex structures and looking for greater efficiencies, lower costs, lower volatility in index and strategies," he added.
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