Best Structured Product Provider –
Most Innovative Index
For example, factor investing has been very popular across institutional investors but has proved to be more challenging for private bank clients to determine which factors to allocate in different market cycles. J.P. Morgan has partnered with a third-party index sponsor to create an all-weather product combining factor style with factor rotation and allocation.
“If you look at the industry in the past few years, there were new payoffs available every few months, but we’ve seen relatively limited underlying innovations. We feel getting the underlying content ‘right’ is as important as getting the right payoff,” said Vincent Ip, executive director at J.P. Morgan.
Smart beta indices have been playing an increasingly important role in Asian HNWIs’ books as investors seek to diversify from concentrated positions in traditional index holdings. According to Morningstar data, smart beta ETFs have seen a 31.2% CAGR increase in assets globally over the past five years, compared to the 21% increase in traditional market cap-weighted strategies.
However, while single-factor investing has been popular with institutional investors, Ip noted that the private banking community has found the approach challenging, given uncertainties over which factors to tilt towards in particular market cycles.
Rising to the challenge and leveraging the breadth and depth of its global capabilities, J.P. Morgan partnered with a third-party index sponsor to create an all-weather index-linked product combining factor style with factor rotation and allocation.
“The index can be structured in a 2-5Y 100% minimum redeemed note to provide alternatives in asset allocation with conservative downside,” Ip explained.
On top of content innovation, J.P. Morgan has further increased transparency in its structured products to avoid the opacity implied by OTC architecture.
“We also have the capability to collaborate with third-party providers rather than simply focusing on our own suite and offer transparency, including fees and individual constituents,” Ip said.
“With the transparency in rules, clients can even replicate our indices with individual holdings if they please.”
Citing the US bank’s commitment to innovation and transparency, and the effective manner in which it leverages its global capabilities, selectors were emphatic in their choice of J.P. Morgan as 2018’s Best Structured Product Provider – Most Innovative Index.