New structured investment HQX boutique to shake up pricing
A new structured investment boutique has launched, initially in the UK, with the aim of shaking up structuring and pricing in the sector to attract retail investors.
London-based HQX, founded by a team headed by James Hogbin, all with long experience in financial product engineering, wants to expand the structured investment market with innovative products and greater transparency on pricing.
“The UK market for structured investments needs to evolve and expand but it can only do that by developing customer-centric products that compete with the very best ideas offered by providers in the ETF, unit trust and hedge fund space. This peer-group compels us to be innovative in product design and transparent in what we charge,” notes Hogbin.
He previously set up the Systematic Asset Management business at RBS, and was also head of Production for Aspect Capital, chief technology officer at Lansdowne Partners, and at Link Asset & Securities. Before working in the financial markets, he built several businesses focused on outsourcing, messaging and social interaction.
HQX will eventually offer a full service across all major segments of the structured investment market in Europe, but at launch it is targeting the UK retail market, via products sold through independent financial advisors. It plans to launch its first range of investments within the next few weeks.
Hogbin said HQX believes structured investment providers “cannot demand a place in the investment universe by right, but that they must earn it”.
“HQX’s philosophy is that we only deserve that place if we are adding value. We strive to earn this place by being transparent in every aspect of our business, from fee structures and pricing to the education and support that we provide in developing the right products…We want to push structured investments into the mainstream of investment, and that means we compare ourselves to the very best ETF providers, unit trust managers, hedge funds and retail investment houses. We contend that a structured investment can be an essential part of a diversified portfolio, just like a bond or unit trust.”
Rather than embed charges in an opaque fashion, there will be a transparent, up front fixed fee for any product. “That fixed fee allows us to provide an appropriate investment – using our design and product expertise to get the best deal for the investor from a range of counter parties,” explained Hogbin. A typical 3% charge will be made by HQX on any structured investment.
Depending on how a client holds the investment, there may also be a separate Plan Management & Plan Administration charge which will also be fully disclosed at the launch of the product.
HQX is also asking advisors how they would build a better structured investment. “Many IFAs have been happily selling structured investments for over a decade now, but we think it’s time to ask them what they’d like to see in new products,” said Hogbin. “We’d hope that they agree with us that transparent pricing and innovation is desperately needed but we also really want them to tell us how the market needs to change…and what would help their clients.”
Hogbin is joined by Jim Baird, Partner and General Counsel, who has 15 years’ experience, starting at NatWest Markets (and subsequently Bankers Trust) where, from 1996 to 1998, he provided legal support to the Equity Derivatives Departments. He subsequently worked at Simmons & Simmons, Dechert LLP and SNR Denton. Tim Haggard is head of Finance for HQX. He qualified as a chartered accountant with KPMG before leaving to follow entrepreneurial pursuits.