Structured Products

The strength of a structured product lies in its flexibility and tailored approach to investing. In their simplest form, structured products, offer investors full or partial capital protection coupled with an equity-linked performance and a variable degree of leverage. They are commonly used as a portfolio enhancement tool to increase returns while limiting the risk of capital loss.

Equity derivates can be extensively customized to meet specific investor´s risk/return profile and investment objectives. These objectives may include capital protection, diversification, yield enhancement, leverage, regular income, tax/regulation optimization, and Access to non-traditional asset classes, among others.

The most common structured product comprises two components:

  • A fixed income security, the zero-coupon bond, which guarantees part or all of the invested principal will be reimbursed.
  • An option-like instrument, which provides a payoff in addition to the fixed income payments. This additional payoff is linked to the performance of an underlying asset, taking the form of either regular coupons or a one-off gain at maturity.

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