Structured products typically offer some form of capital protection. Depending on the investor’s preferences, structured investments are available to completely minimise risk exposure.
Structured products can offer a higher yield on sideways markets.
Investors can easily gain access to a new market or asset class that isn't available through domestic securities.
Buying structured products or structured notes denominated in the portfolio currency can reduce exchange risk.
Structured products can give leveraged exposure to markets.
Investors benefit from falling or range-bound markets.
The return from the investment is zero or even negative due to adverse market conditions. Investment advice on future market trends is needed to ensure the payoff is understood and reflects that view.
The investment issuer does not repay the principal or return. An assessment of the issuer’s credit rating and of any other relevant information (credit default spreads, balance sheet strength...) are needed.
There is only one market maker for the investment who does not provide an after-sales market or quotes a wide bid-offer spread. There are only buy-only investments where the issuer commits to making a competitive aftersales market in a place that is visible to the investor or their adviser.
If the asset goes bankrupt, for example, the bond issuer within a portfolio does not repay the principal. Investors should assess the creditworthiness of the assets the solution is linked to (if disclosed) and their credit ratings.
BMO Capital Markets is a leading, full-service North America-based financial services provider offering equity and debt underwriting, corporate lending and project financing, merger and acquisitions advisory services, securitisation, treasury management, market risk management, debt and equity research and institutional sales and trading. BMO Capital Markets has approximately 2,400 professionals in 30 locations around the world, including 16 offices in North America. BMO Capital Markets is a member of BMO Financial Group (NYSE, TSX: BMO), one of the largest diversified financial services providers in North America with US$532.1 billion total assets and over 45,000 employees as at January 31 2017.
Société Générale is one of the largest European financial services groups. Based on a diversified universal banking model, the group combines financial solidity with a strategy of sustainable growth, and aims to be the reference for relationship banking, recognised in its markets, close to clients, and chosen for the quality and commitment of its teams. Société Générale’s teams offer advice and services to individual, corporate and institutional customers in three core businesses: retail banking in France; international retail banking, insurance and financial services to corporate; and corporate and investment banking, private banking, asset management and securities services.
The Swedish Structured Investment Products Association (SPIS) was formed in 2008 as part of the Swedish Securities Dealers Association. The aim was to create common guidelines for the marketing material of structured products, these guidelines resulted in the SPIS industry code. SPIS main mission is to promote a healthy, efficient and competitive market for structured products, and SPIS works continuously to increase investors, regulators and other community stakeholders confidence in the industry by promoting transparency, comparability and understanding of structured investments.