Citywire - For Professional Investors

Register to get unlimited access to all of Citywire’s fund manager database. Registration is free and only takes a minute.

UBS-Synpulse deal won’t cannibalise existing funds

UBS-Synpulse deal won’t cannibalise existing funds

The UBS-Synpulse structured products partnership announced last week will utilise strategies that won’t cannibalise existing products available to wealth managers in the region, says Frank Troise, head of innovation at Synpulse.

Under the new partnership, the consulting firm will introduce separately managed accounts run by its asset management clients to UBS.

The Swiss bank will then manufacture actively managed certificates based on these strategies and distribute them to private banks and external asset managers via its trading platform called NEO.

The certificates are engineered so they are a mirror image of a separately managed account. Separately managed accounts are a portfolio of securities created for a single account holder, usually accredited or institutional, offering them a customised fund. This differentiates them from mutual funds, which are pooled investment vehicles.

‘On the money manager side, the first thing is that we are not going to market with any strategy that exists as funds. So we don’t want to cannibalise product. We don’t want a situation where the private bank has two similar products from the same money manager, where one is a fund and the other is a certificate,’ Troise told Citywire Asia.

While funds can take up to 18 months to bring to market because of regulatory and registration hurdles, especially when involving retail investors, these actively managed certificates can be launched within 14 days, noted Troise.

He said Synpulse is looking to on-board over 2,000 strategies onto NEO, with an initial focus on Asia-Pacific. The certificates are only available to accredited investors.

‘It’s not uncommon for them [asset managers] to have a $50 million mandate with a sovereign wealth fund and providing them a custom solution that was never wrapped as a unit trust or mutual fund. They have strategies with billions of dollars in them and we want to go to market with them,’ he added.

Actively managed certificates are a relatively simple type of structured product - an investment vehicle that utilises structures involving securities and derivatives that can be quite complex.

Structured products lost their shine in the aftermath of the 2008 global financial crisis but have been gaining traction in Asia in the past few years again, as burnt investors regain the risk appetite to search for outsized returns.

Once manufactured and approved, the certificates will offer daily liquidity and allow private banking clients to access a strategy for smaller denominations than a mutual fund or unit trust would typically allow.

NEO, which is being positioned as UBS’ digital investment bank, was the trading platform of choice for these products because of its ‘superior technology, resources, balance sheet, credit rating, and global distribution,’ Troise said.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.