Structured investments are not designed for secondary markets; they are a full-term investment and individuals are usually discouraged from trading out before maturity.
The lack of liquidity in structures means the bank that issued the note is often the only market maker, meaning investors have relatively little choice if they decide to operate in the secondary market.
Affinity Capital nevertheless understands that circumstances change and investors may need to access their cash, so independent secondary market valuations are one of our many service offerings.
However, there are other reasons why professional investors require accurate post-trade valuations for structures. In many cases, the type of investor will heavily influence valuation needs.
We partner with high-net-worth individuals (HNWIs), family offices, discretionary fund and asset managers, and private banks, all of which have different objectives.
Here is a quick rundown of these investor classes and what their specific secondary market needs may be. For a more detailed examination of structures and secondary markets, click here to purchase Affinity Capital Founder and Director Emma Davidson’s book ‘Financial Weapons of Mass Destruction Put to Good Use’.
HNWIs: Having an up-to-date valuation of structured investments helps high-net-worth professional investors understand how an asset is performing, which is useful for educational purposes and peace of mind.
Family offices: Valuations provide much the same benefits for family offices as HNWIs, the main difference being that family offices manage the money of a group of wealthy members. In addition, family offices need reliable and independent commentary to communicate asset values to the family.
Discretionary fund or asset manager: These clients also require more detailed analysis of secondary market price and performance, including the implied volatility of underlying assets and model probabilities of calling and autocalling.
Private banks: A private bank may require independent valuations and consultancy services for the portfolios of its biggest clients.