BOS: rates, gold and cross-asset structures gaining ground in Asia

Equity-linked structured products continue to dominate issuance across Asia, but investor behaviour is becoming more selective and defensive. According to Bank of Singapore, demand is shifting toward lower barriers, shorter tenors and higher-quality underlyings, while rates, FX and gold-linked structures are increasingly used as portfolio tools for yield enhancement, hedging and diversification.

Equity-linked products remain dominant because they strike a balance between familiarity, yield generation and customisation - James Chye

Equity-linked products continue to form the backbone of structured product issuance across Asia, supported by familiarity, liquidity and their ability to deliver tailored risk-return outcomes.

For James Chye (pictured), head of investment advisory solutions at Bank of Singapore, part of Oversea-Chinese Banking Corporation, this dominance is rooted in both behavioural and structural factors.

“Equity-linked products remain dominant because they strike a balance between familiarity, yield generation and customisation,” he says.

Equity indices and widely traded single stocks are easily understood by investors and can be integrated into broader portfolio allocations without requiring complex framing. Liquidity in both cash equities and derivatives also enables scalable structuring and tighter pricing.

Over the past year, however, the nature of demand has evolved. While investor sentiment toward equities remains constructive, positioning has become more cautious and targeted.

“We have seen investors become more targeted in their selection and more defensive in their exposures,” Chye notes.

This shift is visible in product design. Demand has moved toward large-cap indices and high-quality single names, alongside structures with lower barrier levels, shorter maturities and stronger downside buffers. The emphasis is increasingly on capital preservation and faster recycling of risk rather than long-dated directional exposure.

Trade flows suggest that investors are still participating in equity upside, but with greater sensitivity to drawdown risk and macro uncertainty.

This evolution aligns with broader SRP-reported trends across Asia, where autocallables and fixed coupon structures remain dominant, but with a clear tilt toward defensive payoffs and higher protection levels compared with previous cycles.

Portfolio reshaping

Beyond equities, higher interest rates have significantly reshaped investor appetite for alternative structured products, particularly within rates and FX-linked solutions.

Elevated base rates across global markets have improved carry and made rates-linked products materially more attractive for wealth clients seeking yield enhancement.

“Interest rates have risen broadly across the curve, improving the economics and appeal of rate-linked structured products,” says Chye.

As a result, structures such as interest-rate range accrual notes have regained traction, benefiting from more favourable coupon environments compared with the ultra-low-rate era.

FX-linked structured products continue to play a complementary role within portfolios, primarily as yield-enhancement tools or instruments to express relative value views between currencies.

Demand tends to be cyclical and closely linked to macro conditions.

“Products such as FX range accrual notes are popular under these conditions,” Chye explains, “while demand for accumulator/decumulator or target knock-out structures is largely dependent on volatility.”

In environments where FX volatility is elevated, pricing conditions improve and structured FX products become more attractive for both income generation and tactical positioning.

A notable feature of recent market activity has been the continued strength of precious metals-linked structures, particularly gold.

Gold serves a dual role in client portfolios, functioning both as a defensive hedge and a tactical trading instrument.

“We have also seen strong demand for precious-metals-linked products, particularly gold,” Chye says.

In bullish environments, investors use structured products to gain upside participation, while during corrections they are increasingly used to accumulate exposure at more attractive levels. This dual behaviour reinforces gold’s role as both a strategic hedge and a tactical allocation tool.

This trend reflects a broader shift identified in SRP coverage: commodities are no longer purely opportunistic trades but are increasingly embedded within structured portfolio frameworks alongside equities and rates.

Cross-asset approach

Looking ahead, Bank of Singapore expects demand across asset classes to remain balanced, but with a growing emphasis on cross-asset structuring and portfolio-level solutions.

Rather than viewing structured products through a single-asset lens, Chye highlights a more holistic approach focused on overall portfolio construction.

“We adopt a holistic, whole portfolio approach to structured products, rather than viewing them through a single-asset lens,” he says.

Equities are expected to remain the dominant underlying, particularly in defensive and income-oriented formats. Investors continue to seek yield generation within equity allocations while managing volatility and drawdown risk more actively.

At the same time, commodities — especially gold and energy — are expected to retain an important role as portfolio diversifiers, particularly in an environment shaped by geopolitical risk, inflation uncertainty and fiscal concerns.

Increasingly, structured products are being used to integrate multiple objectives within a single allocation framework.

Chye highlights the growing use of cross-asset strategies that combine hedging, income and macro expression within a unified structure.

“For example, investors with meaningful equity exposure may use equity warrants to hedge downside risk, while allocating to gold-linked structured products to further add a defensive element within the same portfolio,” he explains.

In other cases, investors are combining asset classes more explicitly within single products.

“This approach brings multiple return drivers together, helping investors implement more nuanced views within a single solution,” Chye says.

Examples include cross-asset structured notes linked to both interest rates and equity performance, allowing investors to express macro views while maintaining targeted exposure to equity markets.

This reflects a broader evolution seen across Asia’s structured products market, where products are increasingly being designed not just for standalone yield or participation, but for capital efficiency, diversification and integrated portfolio construction.

Looking forward

Asia’s structured products market remains firmly anchored in equities, but investor behaviour is evolving toward greater defensiveness, selectivity and portfolio integration. Lower barriers, shorter tenors and stronger protection features now define much of equity-linked issuance.

At the same time, higher interest rates have revitalised rates-linked products, while FX and gold continue to play important supporting roles in portfolio construction. The most significant shift, however, is structural: structured products are increasingly being used as cross-asset building blocks rather than isolated trades.

As investors seek to balance income generation, risk management and diversification, the next phase of growth is likely to be defined by integrated, capital-efficient solutions that combine multiple asset classes within a single structured framework.

This is an abstract of the SRP Asset Class Report 2026 which is available for download here. 

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