Maintaining a balance with new underlying assets

The type of underlying assets created by SocGen’s bankers has changed significantly during the last two years, and new asset classes are constantly being added. “There are some common specifics in European countries,” says Mr Desforges. “One major trend is multi-asset class products, using oil and other underlying assets. Products based on a basket of underlying assets are a good way to buy diversification.

“Products based on interest rates, inflation and commodities on average offer a better return for a lower amount of risk. That’s a trend we see in Germany, Switzerland and distribution networks in Benelux and France. They are looking at the ‘best of’ type investment profiles.

“Having an idea of combining asset allocations can make a difference. It’s a good way to solve a complex equation, and to make sure we don’t put end clients on the wrong foot.”

Real estate and hedge funds are also gaining popularity as underlying instruments. Mr Desforges uses his bank’s Lyxor subsidiary to conduct due diligence on underlying hedge funds.

SG has also pioneered the Click Oblig syndicated concept, which offers retail investors a protected, rather than capital guaranteed product, with some equity risk, which then turns into a safer bond, paying a regular dividend, once a certain performance level has been reached.

“We need to find a balance,” believes Mr Desforges. “We feel there is an increasing trend to slightly riskier products to realise investment potential. But we are not talking about highly leveraged warrants.”