SRP Digest: Sustainable growth
The UK regulator steps into the ESG arena, and elsewhere, Natixis goes on a hiring spree.
In October 2022, the Financial Conduct Authority in the UK (FCA) released its consultation paper on Sustainability Disclosure Requirements (SDRs) and sustainable investment labels. Following responses to the paper, the FCA announced in March 2023 it was refining its labelling criteria and the eligibility of different products, asset classes and strategies for a label. Moreover, the FCA is refining the information on the primary and secondary channels that can be used to achieve sustainability, re-assessing its approach to marketing restrictions, and further considering international coherence with other jurisdictions.
Academic research and our own experience are telling us that dispersed risk should lead to better performance - Javier Enrile, BBVA
The FCA’s policy statement is expected to be released in Q3 this year. Considering the imminence of this policy, it is worth considering the implications of the consultation for financial advisers, investors, and investment products more widely and the impact on the structured product market.
Our coverage of the Americas conference saw a group of five panellists discussing innovation and customisation in the RILA and FIA markets. At Lincoln Financial Group, customised indices, which are its differentiator in the registered index-linked annuity (Rila) market, have worked out well, according to Del Campbell, vice president, head of variable annuity product development.
“We leverage a couple of custom indices… [that] already existed in the retail world,” said Campbell. “That made me feel good about having something in there that wasn't built for an insurance company.”
Among their offerings, the First Trust American Leadership Index has been made available with the Lincoln Level Advantage indexed variable annuity. The underlier is owned by FT Indexing Solutions.
In view of its early development in the RILA market, Campbell highlighted the importance of third-party distribution for the products. “Having a lot of distribution helps go out to people that we didn't know,” he said.
France’s Natixis has hired Gerardo Gomez, Andres Bachor, and Guillermo Diez to the LatAm Sales team to ‘expand its emerging markets and Latin America platforms to diversify offerings for clients worldwide’.
The new hires will join Jorge Segui and Thomas Maslowski to round out the French bank’s New York-based team, and report to Gregory Fage, head of macro sales Americas.
Gomez has experience in global markets with a focus on fixed income and derivatives. He joins from BBVA South America, where he was head of corporate derivatives coverage for Brazil and Chile and oversaw project finance derivatives for South America.?Bachor joins from BBVA Securities, where he was part of the LatAm sales team responsible for the development and distribution of credit, FX and rate products in the region. Diez joined Natixis in 2021 in the institutional & corporate FX & cross assets derivatives sales team in Madrid.
Spanish bank BBVA has introduced the systematic multi-asset regional trend (Smart) index, a long-only, rules-based dynamic strategy, for which S&P Dow Jones Indices is the calculating agent. The index offers a diversified combination of asset classes across several geographies.
It is designed to provide stable returns based on three main drivers: trend following, risk budgeting, and diversification.
“The goal of the index is to achieve positive and stable returns in different market regimes,” said Javier Enrile,?global head of QIS sales at BBVA. “Academic research and our own experience are telling us that dispersed risk should lead to better performance, and the right dynamic allocation between?low correlated assets tends to maximise the return for a specific amount of risk […] those are the?main?pillars on which we have based our strategy.”