Market-linked Instruments and Closed-end Funds

New research reports from Investor Economics

If structured product is your game, then you will be interested in 
two important new research reports from Investor Economics. These two 
studies are ‘must haves’ for both industry participants and those on 
the sidelines who need to better comprehend the nature of the 
opportunity as well as the potential competitive challenges for their 
own business or product segment.

Prospective purchasers will have the opportunity to acquire these 
reports either in combination or as one-offs. The Closed-end Funds 
report is available for immediate distribution. The Market-linked 
Instruments report is expected to be available in about three weeks. 
A description of each report is provided below. Inquiries about 
either of these reports may be addressed to the undersigned.

Market-linked Instruments

In this, the fourth edition, we present updated and expanded analysis 
of this burgeoning and rapidly changing market.

This comprehensive study examines the entire market-linked playing 
field from several vantage points. In the opening section we provide 
a roadmap of the market, along with a high level overview of the 
important demand themes and the regulatory and other primary forces 
that are guiding its current state, and which will shape potential 
future development and growth. Here, market-linked instruments are 
looked at in the context of the overall downside risk protection 
component of the wealth market. We examine the size, product makeup, 
and future growth potential of downside risk protection offerings.

Our analysis of the market-linked instruments market is divided into 
two main parts. The first part, which constitutes the bulk of the 
study, offers a comprehensive and multi-faceted analysis of market-
linked notes, often referred to as principal-protected notes (PPNs). 
Sizing of the overall market in dollars and number of instruments, 
perspectives on the number and type of participants, and breakdowns 
of the market by linking vehicle and product structure are all 
addressed. The evolution of the market-linked instruments market in 
terms of product structure and design, key distinguishing features, 
important structural changes, and competitive makeup are provided 
with Investor Economics’ usual attention to detail. We devote an 
entire section of the report to the rapidly growing importance of 
fund-linked vehicles within the overall market-linked notes 
marketplace.

Market-linked GICs are the subject of the second part of the report. 
Size, structure, and the competitive development of the market are 
the primary focal points of this section.

Closed-end Funds

At mid-2006, the market value of closed-end funds exceeded $34 
billion, the number of funds issued and outstanding totalled 268, and 
the number of participants was 62. By comparison, only three years 
ago the market size was $16 billion, the number of instruments was 
142, and the number of managers was 43. The tremendous gains in each 
of these metrics are a testament to the fact that closed-end funds 
and other structured products have begun to alter the competitive 
landscape and growth dynamics of Canada’s wealth market.

This new report—like its companion study on market-linked instruments—
marks the culmination of many months of painstaking data gathering, 
fact finding, and thorough investigation into all of the major facets 
of the closed-end funds market. It is a veritable census of every 
known closed-end fund dating back to December 1998. Our data and 
analysis has been mobilized into 25 exhibits that provide a 
comprehensive cat scan of the market. Accompanying these exhibits is 
a narrative tracing the recent evolution of the market and examining 
the major driving forces in terms of product features, investment 
themes, competitive dynamics, product economics, and compensation. 
The Closed-end Funds report highlights the emerging challenges 
confronting this important market segment, and culminates in a 
discussion of the kinds of changes that will be necessary to ensure 
its future viability and growth.