Structured Products

Structured products is the name given to a group of investments designed to deliver a known return for given investment circumstances and combine two or more underlying assets in order to offer growth or income potential, whilst usually offering some degree of capital protection.

Such investments normally share the following characteristics:

  • Fixed terms, meaning they are not as liquid as deposit accounts or investments in equities;
  • All of the return or interest only is linked to the performance of stock market indices;
  • Enhanced returns available because of the additional risk taken;
  • Growth or income options, or both, are available;
  • Can be held within a variety of product wrappers including ISAs;
  • Varying degrees of capital protection may be available; and
  • Offered only for a limited period and for a limited amount of funds.

A structured product can take two forms – a structured deposit and a structured investment. Structured deposits and structured investment products with some capital protection are often purchased by those looking for alternatives to saving accounts and other deposit-based products.

These products offers growth linked to stock market performance – usually via an Index, such as the FTSE 100 Index, although the amount of return you may receive is sometimes capped.

Some structured products expose your capital to risk, although these plans are often set up with a “safety net feature”, which means the stock market can fall by a certain percentage without affecting your capital return.

You should not invest in structured products if you might need access to your funds during the term of the product. If you do encash prior to maturity, heavy penalties will be incurred and you will receive back significantly less than you have invested.

There are no specific limits on the level of investment other than those that may apply to the wrapper (i.e. ISA or SIPP) for the investment. Also, providers may set their own minimum levels of investment per application.

Past performance is not a reliable indicator of future results