Commodity products structured using traditionally equity-type pay-offs are starting to make inroads into the European retail market, according to fixed income structurers. Demand for exposure to oil and gold from institutional investors has been rising over the last year, noted Tim Owens, head of foreign exchange structuring at JPMorgan in London. "This is filtering through to high net-worth individuals and retail clients," added Owens.
Switzerland and Germany have seen high demand for these types of products in the last three months, he added. Equity structures, which have been popular with commodity underlyings, include target redemption notes. These instruments are not capital guaranteed, but work with enhanced buffers, which provide a high pay-off providing the underlying remains above a pre-determined barrier. Instruments in which the gain in the underlying is locked-in are also proving popular.
