SPA Conference: Modest growth ahead for global structured products, forecaster says

By Emma Trincal

New York, April 3 - The size of the global structured products market remained relatively stable last year, said Joe Burris of Euromoney/ StructuredRetailProducts.com. Sales, however, are likely to be flat in 2012.

Outstanding global invested assets amounted to $2.3 trillion last year, up 6% from $2.18 trillion in 2010, Burris said at a Keynote panel on global structured products in 2011 based on his firm's data.

These figures include $470 billion worth of insurance products.

Size of the market

Europe has not seen any growth, he said, but remains the largest region with 45% of the global shares.

The U.S. activity is incorporated into the Americas region, which also includes Canada, Mexico, Chile and Brazil.

In 2011, the Americas accounted for 19% of the shares while Asia-Pacific represented 36%.

"The assets invested have been fairly stable as many products have long term durations and are held to maturity," he said.

"This is good in that assets do not decline as rapidly in falling markets," he said.

Sales

The global retail structured products market continued to grow last year with gross sales up 4% in 2011 to $378 billion.

"However, we're still 20% below the peak of 2008," he said.

The region with the greatest growth was Asia Pacific with sales up 19%, while U.S. gross sales grew by only 2%. European sales fell for the third year.

Some of the main global trends in the market include more transparency, more listed products, less innovation and the renewed popularity of capital-at-risk products due to the low interest rates and volatility, he said.

Interest rates products have grown from 5% of the sales in 2007 to 26% in 2011.

However, equity-linked products remain prevalent with 60% of the global sales, he added.

In the States, issuance sales remained flat in 2011 at $55 billion and dropped significantly between November and December.

Burris noted that in the U.S. investors' interest has shifted toward capital at risk products. Only 37% of the products offered capital protection last year versus 48% in 2010.

Income-paying products represent 50% of the total of U.S. sales, and equity-linked notes make for 60% of the total versus 50% in 2010.

In his outlook for 2012, Burris predicted a "flat" sales growth, which he broke down into a 5% increase for the Americas, a 10% growth for Asia-Pacific and a 5% decline for Europe.

Part of the slowdown, he noted, derives from the fewer products that are expected to mature at the end of this year; $287 billion could be rollovers at the end of the year versus $366 billion that matured at the end of last year, he said.

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