What is a Structured Product?
Structured products are among the fastest growing investment classes in global finance. The name “Structured Products” comes from the fact that such products are created by combining traditional investments (usually a fixed income instrument such as a bond or a note) with financial derivatives (usually an option). Such “structuring” allows the resulting products to achieve specific risk-return profiles to match the investors’ needs and expectations that cannot be met by traditional investments.
Structured products are unsecured debt securities of the issuer. They are commonly backed only by the issuer’s promise to make good on the intended payouts. Contrary to popular belief, they are NOT equity securities, and holders of these products are not entitled to share the issuer’s profits. The fact that the intended payouts from structured products may be based on equity price movements does not make them equity securities. Structured products are also referred to as hybrid products, because it is possible to mirror equity-like (or other asset classes) returns using a fixed income structure.
Who Uses Structured Notes?
- International Financial Advisor
- Asset Managers
- Wealth Managers
Structured products are not an asset class in their own right, but can be used as an alternative to a direct investment in traditional asset classes, especially in markets where direct access is restricted. For example, when a market is closed to foreign investors, structured products may be the only way to replicate the performance of that market, without directly investing in securities of that market.
Structured products can offer access to exotic asset classes typically out of reach for individual investors. They are extremely versatile, and can be tailor-made to deliver specific risk / return profile to suit the investor’s needs, such as leveraged returns, guaranteed return of capital, or conditional capital protection.
Structured products can also be used as part of the asset allocation process to reduce risk exposure of a portfolio.
Why Invest in Structured Products?
We believe that Structured Products offer many attractive features which can be used to satisfy a number of investor needs and investment goals.
How do NEBA Financial Solutions play a role in providing structured products?
NEBA Financial Solutions are experts in product design. We research, build, and distribute high quality Structured Notes for our clients. Our comprehensive Menu of Notes can help you find the right investment for your clients. Our team is also on hand to help you create Bespoke Notes to suit your clients’ investment attitudes and requirements.
Register with us to access NEBA’s full range of products, tracking reports and market updates for all your NEBA investments today or contact us at [email protected] to obtain more info. We’ll be more than happy to help you out!