The Swiss structured products industry has had a strong finish to 2022

The Swiss structured products industry has had a strong finish to 2022, with turnover in Q4 reaching CHF 51 billion, bringing the total turnover for the full year to CHF 221 billion. This is a significant increase from the previous year, demonstrating the continued popularity and success of structured products as an investment tool.

The breakdown of the Q4 turnover shows that capital protection certificates with coupons had the highest turnover at CHF 11 billion, followed closely by reverse convertibles at CHF 10 billion, and warrants with KO at CHF 5 billion. This indicates that investors were particularly interested in products that offer some level of capital protection while still providing the potential for attractive returns.

It is worth noting that turnover was slightly lower in December, with CHF 16 billion, compared to October and November which had turnovers of CHF 19 billion and CHF 17 billion, respectively. This is likely due to the holiday season and year-end activities.

Structured products are known for their flexibility and ability to meet a wide range of investment objectives. They offer investors the opportunity to invest in a variety of underlying assets, such as equities, currencies, and commodities, while also providing unique risk-return profiles. For example, capital protection certificates offer downside protection while still providing the opportunity to earn a higher yield than traditional fixed income investments. Reverse convertibles offer the potential for attractive returns while providing some downside protection, while warrants with KO can provide leveraged exposure to an underlying asset.

The strong performance of the Swiss structured products industry in 2022 is indicative of the continued demand for these products, particularly in a low interest rate environment where traditional fixed income investments are not providing the returns investors are seeking. With the flexibility and range of options available, structured products have become an important tool for investors looking to achieve their investment goals.

In terms of market trends, the focus on capital protection certificates with coupons in Q4 is not surprising given the uncertain market environment. These products offer a level of downside protection that investors are looking for in times of volatility and uncertainty. Additionally, the focus on reverse convertibles and warrants with KO suggests that investors are also looking for products that offer some level of upside potential.

It is also worth noting that the Swiss structured products industry has been impacted by regulatory changes in recent years, particularly with the introduction of the Financial Services Act and Financial Institutions Act. These regulations have introduced new requirements for structured product issuers, including the need to provide more transparency around product costs and risks. While these regulations have increased the administrative burden on issuers, they have also helped to improve the overall quality and transparency of structured products, which is important for maintaining investor confidence in the industry.

Looking ahead, it is likely that the demand for structured products will continue to grow as investors seek out alternative investment options that offer the potential for attractive returns in a low interest rate environment. With the continued focus on regulatory compliance and transparency, investors can feel confident that the structured products industry is working to ensure the quality and safety of these investments.

In conclusion, the strong performance of the Swiss structured products industry in 2022 is a testament to the continued demand for these products as a valuable investment tool. The range of options available and the ability to meet a variety of investment objectives make structured products a flexible and attractive investment option for investors. As the industry continues to evolve and adapt to changing market conditions and regulatory requirements, investors can feel confident that they are investing in a safe and transparent market.