The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Structured products: Concerned clients demand a rethink

Structured products are proving neither as safe nor as lucrative as investors were led to expect. However, discomfited clients are prompting those banks that have survived to devise products better suited to difficult conditions. Peter Koh reports.

Flow business benefits

STRUCTURED PRODUCT INVESTORS, typically wealthy individuals or institutional fund managers that follow sophisticated strategies, should ordinarily be expected to sleep peacefully in times of uncertain market conditions, comforted by the soothing partial or total principal protection they have bought. But the extraordinary conditions of the financial crisis have disturbed even those who thought they were insulated from such things, with nightmarish plunges in the mark-to-market value of their investments.

Collapsing stock prices have brought about the worst-case outcomes envisaged by some investors, while for others, the collapse of confidence in the creditworthiness of some of the terribly convincing banks that sold such things has redefined what ‘worst expectations’ really means.

The poor performance of structured products is, however, hardly unique in the present market and the investment banks that invented them still believe in their merits and are busy devising new ones, better suited to present conditions, even if the products originally turned out to be money losers for the banks themselves.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to Euromoney.com and Asiamoney.com analysis and receive expertly-curated updates direct to your inbox.

 

Already a user?

Login now

 

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree