Ingenuity is probably one of the most distinctive qualities of the structured product industry. Its capacity to come up with a solution, no matter the circumstances, is one of its great qualities. Sometimes, however, creativity can become a weakness, as is the case when explaining complex structures is concerned.
Decrement indices have become one of the industry’s simplest innovations over the last four years and are delivering positive returns to investors. But in spite of their success, they have also been subject to criticism because they are difficult to explain. What is a decrement index? Decrement (aka synthetic dividend) indices are optimised gauges tracking a benchmark where the future dividend is fixed in advance. Strictly speaking, they reinvest the dividends paid by companies in the be
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