Fund-wrapped and insurance-wrapped structured investments are leading the growth in U.S. structured products. They are becoming increasingly popular with mutual funds and closed-end funds looking to outperform benchmark indices.
Keith Styrcula, founder of the Structured Products Association, said the SPA is forecasting 20% to 25% growth next year as a result of these retail-driven products. Managers are using more automated, algorithmic, structured strategies and synthetic derivatives to outperform the index, he said, noting a migration from notes to fund-wrapped channels. "It has been a quiet revolution in the mutual fund world. But there has been a massive, dramatic push in the closed-end world."
Goldman Sachs Asset Management last month renamed its five CORE mutual funds structured funds. Merrill Lynch Investment Managers recently created a structured funds group and Babson Capital created a new fund-wrapped group. Andrea Rapheal, Goldman spokeswoman, and Megan Frank, Merrill spokeswoman, were not immediately available for comment.
