Safe but sorry

Burnt in recent equity market sell-offs, high-net-worth investors are clamouring for investment products that will preserve their capital. But private bank advisers are on the whole unconvinced that structured products, outside of limited use for tactical asset allocations, offer adequate returns or are sufficiently cheap and transparent to recommend to their clients. Helen Avery reports.

JUST HOW SOPHISTICATED are high-net-worth individuals? Smart enough, it seems, to judge that they should be investing in derivatives. In a survey of UK high-net-worth individuals carried out in November 2004 by Tulip Research, 63% of respondents said that structured products should be considered as part of a private investor’s portfolio, recommending that as much as 15% of a portfolio should be invested in them. Consultants say it’s a trend that is sweeping the globe.

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