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Overview of Structured Products

A structured product is a pre-packed investment policy that is intended to allow investors to achieve exposure to equity indices, currencies, basket of stocks, interest rates & commodities with a coped level of capital risk.

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Structured products are dogged by two elements – the level of capital protection as necessary by the investor & a derivative which links the investment by an underlying index, a currency / a basket of securities.
Eventually, structured products can add value to a well-diversified portfolio; offered that they fit the investor’s overall policy. Structured notes can also be used to access dissimilar assets classes in private client portfolios.

Categorization

Affluence Managers therefore suggest that in some cases investors could grip a structured product instead of a bond.

1. Some ask that if a structured product could go downward in price because it’s linked to an underlying index or because of its bond content or volatility shifts, where structured products should be positioned in client valuations and for that some argue that structured products should fall beneath a separate section in a client valuation, but when it comes to use them in a portfolio, they can be used in place of fixed income / equities.

2. A few ask that how firms classify structured products and if a client holds a structured note in place ofin one currency equities, it’s listed under that equities or not and the answers is, structured products are a way to access further asset classes, hence the term derivative. Consequently it’s difficult to classify however, they’re usually placed into valuations based on causal exposure.

One must also be conscious of the credit risk underlying the products, as revelation to one institution can add up across a variety of structured products with potential cross-over by fixed income, for example.

Diversifying risk

Structured Products also address the matter of ensuring clients that they aren’t exposed to concentrated counterparty risk – thanks to new kinds of products coming on the market. New types of structured funds hold a variety of structured products, rather than being pedestal on one autocall. Such type of product also has no exit date, as it’s being rolled forward continuously.

Thus, structured products are synthetic investment instruments particularly created to meet specific needs that can’t be met from the standardized financial instruments accessible in the markets.