Best in Ireland

Eanna McCloskey

Wealth Options

Wealth Options took aim this year at the "diet of mediocrity" it says it saw in the Irish structured products market, producing fresh, innovative products that have enlivened the investment landscape and are worthy of copying.

It is not just the trend for simplicity that had made for a rather dull selection of structured products for Irish investors, says Eanna McCloskey, managing director at County Kildare-based Wealth Options. "There is no imagination there - it is simply picking an index because it is currently at a low point in the hope it will produce some sort of return over the next few years.

Wealth Options gets its ideas by trawling the market every couple of weeks, looking at the European markets, notably Benelux, and the UK to see what has been successful. "Our competitors have started to replicate what we do within several weeks of us bringing [the products out in Ireland]," says McCloskey.

The distributor ensures it has a minimum of three products on the shelf, which may just be the starting point for the conversations its eight business development managers have when they are on the road.

Wealth Options has been working on absolute return strategies, ranging from basic computer models to complex algorithms, where there is no active management.

The company has been very much part of move to more managed funds with its Global Absolute Return (Gar) Bond. "This is where we see the next 12 to 24 months going, with access to well-known, international, actively managed funds rather than just tagging on a proprietary index," says McCloskey.

Wealth Options has relied on focus groups to help gauge investor appetite for actively managed investments, which it has underpinned with capital protection, a feature that has turned out to be of prime importance to retail. "Structured products are the way to do that while doubling the cash available on other investments or deposits," says McCloskey.

"Our customers have enjoyed strong capital protection under these investments and we continue to recommend Wealth Options to customers needing capital protection who want an alternative to standard deposit accounts," says John Molloy, managing director at Orca Financial in Blackrock. "Wealth Options is highly innovative in the type of investment products and funds available, and is very much a market leader in this bespoke investment fund category."

The shift away from investment banks' strategies "cuts away the education time that is required," says Brian Flynn, sales director at Wealth Options. "When we held the focus group, every six to eight weeks we had to re-educate on the strategy being promoted at a given time. Whereas with the introduction of funds such as Gars, and with our global performers, where we have introduced the likes of Blackrock, we have included funds that our intermediaries are giving advice on every day. To provide them in a structure that has capital protection has definitely captured the imagination and has worked well for us."

The advantage comes from talking to investment banks directly and getting access to more interesting products and product ideas. Gars was a case in point, with the idea arising from conversations with clients and intermediaries who had been talking about a Standard Life Gars fund. "So we said, why haven't they put a capital floor under it or a capital security offering on it, and is that something we could look at?" says McCloskey. "Five years ago, we could have taken it to one of the banks here and they would have laughed. But we had access to the investment banks in the UK, so we went to four of them, of which three laughed and one - BNP Paribas - thought it was interesting."

After 14 months of discussions, BNP came up with the SLI Enhanced Absolute Return Index in conjunction with Wealth Options. The index is linked to the total return performance of the Standard Life Investments Global Absolute Return Strategies Fund and embeds a dynamic risk-control mechanism. There is a cost for the capital security, which is provided by Ulster Bank, but if volatility is below 5%, exposure to the index can be 150%, thereby outperforming the fund.

After one year, the product has returned 5.2%, about 1% behind the Gars fund. The eighth tranche is underway and the ninth is advertised on the firm's website, with €40 million committed since last November.

Then came the Global Stars Performers (GSP), which is now raising more money per tranches as the appetite for Gars falls. GSP is linked to five funds: Carmignac Patrimoine, Standard Life Gar Fund, Ethna-Aktiv E Investment funds, BNY Mellon Global Real Return Fund and the Blackrock Europe Absolute Return. Capital security, again, comes from Ulster Bank, and €11.8 million was raised between May and October.

"Our relationship with Wealth Options is very much a partnership," says Liam Croke, managing director of Harmonics Financial in Limerick. "Their service is excellent, as is their innovation, and there is never an issue or question that is not dealt with by their wonderful team... The little things matter to us and in Wealth Options we have a kindred spirit."