Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The new additions are: Boon Yong Leo, a 10-year Rabobank veteran who transfers from the non-standard products desk in Tokyo; Xavier Ducros, who joins from HSBC, where he headed the structured solutions team; and Janice Leung who previously worked in the model risk and vetting team at Bank of Montreal Financial Group in Toronto, Canada.
"Our fund derivatives business in Asia is completely new," says Wu. "But the team is already working on launching new products and we expect to close a number of interesting deals this year."
The high-profile failure of several hedge funds during the summer has spurred interest in using structured products to give investors insurance against losses while retaining some of the upside û the so-called alpha. "That's what structured products do," says Wu. "They give investors the risk/return profile that suits their needs."
The core of Rabobank's fund derivatives expertise will stay in London. Most of the fund managers that these products are buying into are based in Europe or the US, and Asian investors have similar demands to their counterparts in Europe, which means that a lot of the legwork already being done in London can also be used to create products for the Asian market.
However, Wu says that he also hopes to be able to create products built around Asian funds that Rabobank can sell back into Europe. "There are a lot of good managers out here," he says.
Rabobank's fund derivatives team is also structuring leveraged and pass-through products. The pass-through structure uses derivatives to mimic the returns of a fund û useful for accessing restricted markets û whereas leveraged trades can boost the returns of the underlying fund or funds. Principal protection, however, remains the biggest part of the market.
Regulators keep their eyes open on tightening insurance industry by introducing more detailed risk management requirements, which could bring pressure on smaller players.
China and India are more obvious choices for AustralianSuper to consider in Asia Pacific, but the super fund currently lacks the expertise and prefers to stick to the US and Europe.
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