Structured Products are highly useful for investors. They combine a ‘low risk/ low return’ component (usually zero coupon bonds) with a ‘higher risk/higher return’ component (equity, FX, FI, commodity) to form a single, optima… Read More »
A brief news search in your favorite online search engine for “structured products” returns a number of articles from several major financial news organizations’ websites decrying structured products as unfit for savvy investors. Fo… Read More »
This article is a simplified, broad overview of the basic characteristics of Structured Notes. Obviously, each Note is individually customized to meet the requirements of a particular audience so terms and conditions of each Note must be examined ind… Read More »
In recent years, the international investment arena has witnessed a huge increase in the popularity of Absolute Return funds that aim for a positive return regardless of how markets perform, usually over a rolling time period of no more than three y… Read More »
Back in 2008/09, the market for structured products was under intense scrutiny by regulators after the collapse of Lehman Brothers left some investors high and dry. A subsequent FCA review of the suitability of advice on structured products found sev… Read More »
Autocall products are increasingly popular with investors, advisers and product providers and should be judged on investors’ comfort, not on missed opportunities. Autocalls, also known as kick-out plans, have captured a large part of the structured product market in recent years. Product providers use them to offer higher payoffs than other SPs that automatically run to a full term. Advisers are using them to generate double-digit returns and provide portfolio diversification. Autocalls pay out a defined return providing a predefined event takes place. A simple FTSE-based product may offer 10% per annum if the index rises by a set amount from its initial starting point. If the trigger event occurs, the plan terminates early and returns investor cash plus the offered coupon. Should the trigger not occur, the plan keeps going to subsequent trigger anniversaries until kick-out conditions are met, rolling up coupons as it goes. If the plan reaches maturity, it pays out the cumulative coupon and returns the initial investment.
Many current products are based on single index structures that kick out if the market is flat or higher than its strike rate on each anniversary. Even if plans do not kick out, investors should remember they have not lost an annual coupon, merely rolled it up.
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The changing economic environment is forcing cautious investors to take more risks within the structured products market. Cautious investors are now willing to abandon the guarantee return of their initial investment in a bid to chase a higher profit… Read More »
Correlation – the measure of how securities move in relation to each other – shot higher during the Lehman crisis and remains stubbornly high. Some observers note it is even spreading from individual stock movements into other asset classes and equit… Read More »
Sales of structured notes denominated in rubles may quadruple in the next year as investors snap up the securities to profit from the economic rebound in the world’s biggest energy-exporting nation. Issuance of credit-linked notes, whose returns are… Read More »
They will help your capital appreciate and also give guaranteed returns.
Realty had a reality check when it melted furiously and was brought to realistic levels. It’s now back in the limelight, with demand picking up slowly. When there is a dearth of buyers, products get the much needed innovative streak and this is what happened.
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