What does our expert say? What are structured products?

Our expert Meike Wasem explains what structured products are and when they are a worthwhile investment for women investors.

At first sight, the idea of structured products is off-putting for many. But thanks to their diversity and flexibility, structured products can be a worthwhile investment.

Structured products? Sounds complicated! Does this sound familiar? Yet structured products are nothing like as complicated as many people think. Structured products are an innovative and transparent way for you, as a woman investor, to meet different investment needs – tailored to your individual risk profile and your view of the markets, i.e., whether you’re expecting them to rise, fall or remain stable.

Structured products combine traditional investment products (e.g., equities, foreign exchange, commodities or fixed-income securities) with derivative financial instruments (e.g., options, futures or swaps). This combination gives rise to a new product with a separate payout profile.

Spoiled for choice

The topic of financial investments is broad and the choice of investment opportunities is wide. When discussing investment decisions with women, we often hear them speak of their need for certainty and the possibility of security. The great advantage of structured products is that they meet both these needs and that you, as a woman investor, know from the very beginning what potential profits and losses await you.

These four categories of structured products are particularly popular:

  • Capital protection products are suitable for women investors who want a high level of protection for their invested capital. In most cases, these products pay a defined return. Capital protection products can also allow women investors to benefit from positive – or, in some cases even negative – market developments.
  • Reverse convertibles can help if, in principle, you want to increase your equity component in a portfolio, but don’t want to buy stocks directly due to potentially high prices. They are an alternative to a direct investment. With a reverse convertible, you agree to purchase a certain underlying asset (e.g., a stock) at a defined price that is usually low. In return, you receive a coupon on the investment amount, i.e., a payout as compensation for the purchase commitment. This allows you to purchase underlying assets at a potential discount without paying a commission (i.e., a fee for direct stock purchase).
  • Barrier reverse convertibles are suitable for aligning stock positions more defensively, i.e., with a low risk propensity. This can be particularly advantageous if, as a woman investor, you believe that markets are trending sideways or falling slightly. Compared to a comparable reverse convertible, the additional barrier offers greater protection against price declines.
  • Bonus certificates provide an opportunity to benefit from potential gains, while at the same time reducing the risk of a price downturn. Profits already achieved can be hedged on existing stock positions by exchanging the position for a bonus certificate.

Increase opportunities and reduce risks

As you can see, there are structured products for almost every type of investor. Conservative women investors with defensive capital protection products also get their money's worth because of the flexibility provided. The most diverse market expectations can be taken into account. However, never forget that the higher the potential gains, the higher the potential losses. For example, if a product does not have capital protection then as an investor you must take on the market risk of the underlying asset. So look carefully before you leap.

What else do you need to remember?

Structured products are generally suitable as a complement to a long-term and diversified core portfolio. As with any financial product, before investing you should be clear about your own investment goals. What level of risk lets you sleep at night? What are your investment goals and expected returns? The variety of structured products available can be confusing or overwhelming at first, but don’t be put off: it’s precisely this variety that makes investment worthwhile.

We will be happy to help you choose the right investment product for you. Whether in a personal consultation or with our SP Finder.

Women’s Wealth Academy

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