Struc­tured Products

Par­ti­cip­a­tion products closely track an un­der­ly­ing asset. They carry the same down­side risk as the un­der­ly­ing. These se­cur­it­ies are a good choice if you ex­pect the un­der­ly­ing to go up. Bonus cer­ti­fic­ates also have a bonus level that may take ef­fect de­pend­ing on the un­der­ly­ing’s per­form­ance.

Yield en­hance­ment products pay a defined coupon and con­tain a risk buf­fer or “bar­rier.” If the un­der­ly­ing falls below the bar­rier, you lose the pro­tec­tion and carry the same risk as if you held the un­der­ly­ing asset. This solu­tion is a good choice if you ex­pect the un­der­ly­ing’s price not to change.

With cap­ital pro­tec­tion products, you par­ti­cip­ate in any price gains of the un­der­ly­ing asset, while the re­cov­ery of your ini­tial in­vest­ment is also guar­an­teed by the is­suer if the un­der­ly­ing asset falls in price.

Struc­tured products are not fund as­sets and so are not pro­tec­ted if the is­suer files for bank­ruptcy. That makes the is­suer’s cred­it­wor­thi­ness very im­port­ant. This risk falls to the in­vestor.

In­vest­ments can only be sold if there is a buyer will­ing to take them. If no buyer can be found, it may not be pos­sible to sell the in­vest­ment at a reas­on­able price. This risk falls to the in­vestor.

Mar­ket prices gen­er­ally fluc­tu­ate. Mar­ket risk refers to the danger that the price of the un­der­ly­ing asset may not de­velop as ex­pec­ted. This risk falls to the in­vestor.

Ex­change rate fluc­tu­ations can af­fect the value of an in­vest­ment if it is de­nom­in­ated in a for­eign cur­rency. In­vestors may end up sus­tain­ing a loss even if the product goes up in price.