Structured product sales to Australian retail investors are set to double in 2007.
According to estimates from JP Morgan, retail sales for structured products in the Australian market were worth around $2 billion for the half year to June. This compares to $1.5 billion for the whole of 2006.
"We expect that retail sales for structured products will be around $3 billion by the end of the year," JPMorgan vice president David Jones-Prichard said.
"The great thing is when we look at the numbers for this year not only are they growing in volume, but the pace of that volume has increased."
Speaking at the 2007 Australian Structured Products Forum in Sydney, Jones-Prichard said adviser education in new products would be a key to the trend continuing.
"As volumes have grown we have also seen a lot of variety as to what is on offer in terms of both the underlying assets and the structure of the products. This makes the education for both the adviser and the end user so important," he said.
General consensus on the panel indicated the recent bout of market volatility had made structured products, particularly those with capital protection, attractive to the retail market.
According to Merrill Lynch vice president Peter Mermelas, institutional structuring mechanisms are now increasingly being offered to the retail market.
"These complex ideas, originally demanded by institutional and private clients are then being relayed into the retail market," he said.
"We are seeing a lot of demand for innovation within superannuation funds and that is from institutional all the way through to retail.
"As soon as we have a capability to structure a product and bring an idea to market, ideas that investors may not have seen in Australia before, such as a theme based around Chinese infrastructure, we will try and transfer it across to the Australian market place."
