Blue Sky Asset Management (BSAM), a new boutique firm specialising in structured products, is to launch its first funds next month.
Established by Chris Taylor, chief executive, and Mark Dickson, product development and operations director at the firm, BSAM targets the growth in demand for structured products in the British market.
The use of structured products in Britain has risen from about £1 billion-£2 billion in 1996 to £6 billion-£7 billion in 2007, according to BSAM. It expects the market to increase by a further £2billion-£3 billion in 2008.
Taylor, former director of UK structured products distribution at HSBC, says increased volatility and uncertainty in markets encourages investors to choose structured products.
“We are seeing a return to popularity and a wider acceptance [of structured products],” he says. “Many more managers are comfortable and keen on using structure again. The top-end [IFAs] particularly are using structure to get access to asset allocation themes and underlying investment themes.”
Structuring can enable investors to access specialist markets such as private equity, infrastructure and commodities, says Taylor, but with capital protection as well. “It’s [about] accessibility and risk reward profile. Structures can give low-risk access.”
There is a gap in the market for research driven structured products, Taylor adds. “Research will drive what we are doing,” he says. BSAM has developed an exclusive alliance with Redtower Research, which will provide a specialised service to the firm.
According to Taylor, two of the first BSAM launches in January are likely to be asset allocation themed ideas.