It is time for the annual trading competition ”Sijoittajamestari” and we managed to get a quick chat with one of our sponsors and ETP providers, Vontobel.
1. What are your thoughts about the trading competition?
Well, I think it was a really good idea from NGM to launch this trading competition. The increasing amount of participants during the last few years shows that trading has a growing relevance for investors and that the trading community is increasing. Furthermore, it is a very good tool for education. Interested investors can paper trade in the competition (without any real economic profit or losses), collect experiences and generate know-how. So, it is a perfect exercise for everybody who wants to learn and/or train trading.
2. How would you describe the different products you offer?
Vontobel offers a broad range of leverage products. Investors find one of the biggest portfolios of Bull & Bear certificates but also a well selected portfolio of Mini Futures and Open End Knock-Out Warrants. Furthermore, we offer tracker certificates on various themes like China Automobile Sector or a Nordic Sea Food Index. Investors find leverage products on various underlyings like Nordic, European as well as US equities, commodities and currencies. So, we provide market access to various asset classes with leverage for the active investor.
3. What would be the main reasons to choose ETP products instead of investing in plain equities or mutual funds?
Mutual funds are long-only products and for long-term investors. Investors are unable to take short positions or to bet on market volatility and short- as well as mid-term market movements.
Equities are more flexible, but also only investable on the long side.
People who want to set highlights and focus in their portfolios need ETPs in order to react quickly and with leverage. Even small market movement can have high performance implications with leverage. Using leverage can also be a more capital-efficient way to invest your money. It is not necessary to invest always with high leverage positions. Thanks to leverage, investors can open positions in asset classes with less money than in the cash market.
And last but not least, ETPs is the only product which allows investors taking long and short positions. Investors can trade price corrections in underlyings but are also able to protect their portfolios. I would say this is one of the most neglected facts when we talk about ETPs…it is not only about leverage, it is about investing your capital more efficiently and use ETPs for portfolio protection.
4. Who would be a typical investor in your products?
A typical client is the active investor. This can be a day trader who executed multiple trades a day, a position trader who manages a small part of his portfolio with leverage products and position trading based on special market situations (Technical Analysis, news flow, macro figures) and last but not least an equity investor who wants to protect his portfolio with Put Warrants or Short Mini Futures. A typical investor has experience in financial markets and a very good knowledge of the functions of an exchange traded product (ETP).
5. How would you describe the Nordic market compared to the rest of Europe?
The Nordic market is one of the most active markets for leverage products. Even if the turnover is decreasing according to European statistics from EUSIPA, Nordic Investors have a high affinity to financial markets and are well educated in terms of product knowledge and financial market behaviour. I assume this is related to the high equity ratio in your pension savings.
Continental Europe relies more or less on Bonds and Insurance products, whereas in the Nordics we always meet a high and well-founded equity culture. And this is also replicated in the ETP market.
But, Nordic people are very active on the leverage product side but have a very neglected market for listed investment products like Reverse Convertibles, Bonus Certificates etc. In that market segment, the rest of Europe is more progressive and professional.
6. What would you like to highlight in your bank’s product offering?
Above all, we offer very interesting tracker certificates. One famous one is our Swiss Research Basket. An open end-tracker certificate which replicates a portfolio of the top recommendations from Vontobel Analysts. Vontobel Research have been voted no. 1 for Swiss equities eight years in a row in the annual Extel Survey (which covers votes across the investment industry). Also the Nordic Seafood tracker certificate, one of the best performing financial instruments in 2018.
Concerning leverage products, I want to highlight our broad portfolio of commodity underlyings which includes also a broad range of soft commodities as well as our portfolio of index-based products.
Vontobel is well known for its attractive pricing as well as the market making quality. Zero fee trading is not always the cheapest option. In the end of the day, if something looks very cheap or costs nothing, there must be something wrong. So, look into the details, compare the products and read the prospects and the KID documents.
Last but not least we have a very nice tool on our website. Investors who arrive on the Vontobel website can use our social media widget. It shows in real-time the five stocks in the Swedish market, which generate the highest activity in Social Media. Traders who believe in interdependence of social media discussion/awareness and stock price movements find detailed information about the generated news flow and the importance of the news in this widget. Bull & Bear investors find a scenario calculator which helps them to understand the performance behaviour of bull & bear certificates in various market scenarios.
7. Do you have any advices for the traders in the competition?
The most important advice is investors should know how the ETPs are working. They should be aware of how these products behave in various market environments.
So for example, Bull & Bear certificates only qualify for short-term traders. It is not made neither for buy-and-hold investors nor for longer-term position trading.
For portfolio protection and rather mid- or longer-term positions, investors should have a look into Mini Futures and Open End Knock-Out Warrants.
Furthermore, investors should also know while opening a position, at what price to close if the market is going against my scenario and at what price to cash-in profits. So, if you trade ETPs, it is mandatory to keep a close eye onto the market.