Structured products are alternative investments designed to meet specific investment objectives and can be customised to align with your risk tolerance, return expectations, and market views. This flexibility allows you to tailor the product to your portfolio’s needs and preferences. Structured products can be tailored to offer one or more of the following features:
Diversification
Structured products often provide exposure to various underlying assets or investment strategies. By including structured products in your portfolio, you can enhance diversification and reduce concentration risk. For example, you can gain exposure to different asset classes, sectors, or geographical regions, potentially reducing overall portfolio volatility.
Risk Management
Structured products can be structured to mitigate specific risks. For instance, they can include downside protection mechanisms, such as capital guarantees or buffer levels, which can help limit losses in adverse market conditions. By incorporating such products, you can manage risk more effectively and potentially achieve more consistent returns.
Enhanced Returns
Structured products can offer the potential for enhanced returns compared to traditional investments. They can employ strategies such as leverage, participation in market gains, or enhanced coupon payments. These features can enable you to capture market upside while potentially generating higher yields than standard fixed-income instruments.
Income Generation
Some structured products are designed to generate regular income streams. They may offer higher yields than traditional fixed-income investments, making them attractive for income-focused investors seeking alternative sources of income in a low-interest-rate environment.
Tailored Exposure
Structured products can provide exposure to unique or niche investment themes that may not be readily available through traditional investment vehicles. For instance, they can offer access to specific sectors, commodities, or alternative investments. This allows you to implement specific investment strategies or capitalize on particular market opportunities.
Liquidity and Transparency
Structured products can be designed to provide varying levels of liquidity, depending on your requirements. While some products may have defined maturities and limited liquidity, others may offer periodic liquidity windows or trade on secondary markets. Additionally, structured products often disclose their underlying components, providing transparency regarding the assets and strategies involved.
It’s important to note that when used correctly, Structured Products, can be a useful tool in your investment portfolio, they can also carry significant risk. It’s essential to thoroughly understand the product features, underlying risks, and associated costs before investing in any of these products though. We suggest that you consult your Financial Adviser to help you assess whether structured products are suitable for your specific investment objectives and risk profile.
If you’re a Family Office, Financial Adviser, Fund Manager or sophisticated investor, get in touch to ask us how we can structure a product specific to your needs.
