In a market that has grown from EUR3 billion of assets under management in 2003 to EUR30 billion by 2006, according to the Autoriteit Financiele Markten, ABN Amro is at the forefront with 35% of the primary market. A market share in excess of 80% on Euronext Amsterdam further supports the bank's strength in the Dutch structured products market.
ABN's dominance in the secondary market comes from leveraged investments such as its Turbo product range and Delta One certificates that track a particular underlying. Combined with the more traditional examples, such as capital-protected products, real estate and high-yield structures, this gives the bank by far the broadest product range in the Dutch market, says Jean Paul van Oudheusden, ABN's head of structured products for the Benelux region.
"The business we run is client-led and it is a two-way process. There is constant dialogue between distributors and end clients, to discuss what they would like to have and what we should put forward. At the same time, we also look at new markets and come up with product ideas ourselves," says Oudheusden.
For instance, at the start of the year the bank issued a series of Pan-European Property Notes on a basket of European stocks, somewhat of a rarity in the market. ABN was able to tap into client demand for real estate and structure a constant proportion portfolio insurance (CPPI) instrument in co-operation with the bank's internal real-estate research desk. "The notes show the strength we have in bringing such new products that provide investors with protection and the ability to participate in any profits run," he adds.
Another product that has found favour among clients is Dutch Delight, a CPPI structure built on a basket of locally well-recognised investment funds with strong track records, like Fortis Obam, Delta Deelnemingen Fonds and ABN Amro High Income Equity Fund. Benefits for investors include a dynamic investment in the leading Dutch funds, an annual coupon based on the dividend derived from these funds and principal protection at maturity.
And ABN is really making a name for itself in socially responsible investment, in which it offers a wide variety of products on its Eco Markets platform relating to water, biofuel, renewable energy, solar energy and carbon emissions. In September, the bank issued the World Bank Eco-3 Plus note, where the World Bank provides the capital guarantee and the upside is linked to ABN's Eco index. "This came from client demand and is really innovative as it is the first such product for private investors in the Netherlands," says van Oudheusden.
Another product that has distinguished ABN from competitors is the Emerging 11 certificate, which is linked to countries that are expected to experience rising economic growth due to their geographical positioning around the Bric countries of Brazil, Russia, India and China. The certificate gives investors access to up to 11 countries and 283 shares and invests in Brazil, China, Egypt, the Philippines, India, Indonesia, Mexico, Pakistan, Russia, Turkey and Vietnam. "It is a theme that has performed and sold well and there is no other product in the Benelux region that gives investors access to these countries," notes van Oudheusden.
He adds that as emerging markets remained fairly stable and performed better than expected during this summer's market turmoil, there has been more demand for Bric themes, such as the Emerging 11 certificate and also ABN's Bric infrastructure product.
"Clients believe that emerging markets will become more stable and continue to grow and we have the product range to cater for increasing demand as most private investor portfolios are underweight emerging markets," he adds.
The Turbo range of leveraged certificates is the market leading product, garnering a 95% market share on Euronext Amsterdam and this year the bank has added investment funds as a new underlying with leverage of up to four times. In addition, Turbo Long and Short certificates have proved popular.
The ABN Amro Markets website provides a Turbo Meter that shows how much is invested in long positions compared to short ones. He adds that retail investors are starting to understand when to apply the short concept and consequently the product has seen good volumes, particularly during August.