Most structured investment products are made up of fixed income products which help to protect capital, combined with equities and derivatives, which help to provide returns.
Structured investment products could be right for you if:
- You are prepared to keep your money locked away for between one and five years
- You want to make the most of your tax efficient ISA or SIPP allowance
- You want reassurance that some of your original capital is protected
- You want a fixed term that allows for budgeting and planning
- You want to gain access to assets that would otherwise be off limits e.g. hedge funds or commodity prices
However, structured investment products are not right for everybody, for example, they may not be right for you if:
- You might need immediate access to your cash
- You do not want an index linked investment
- You want a guaranteed rate of return
- You want to invest regularly
Other things to watch out for include the product's counterparty, which is the investment bank responsible for supplying the derivative arrangement. It is the counterparty that risk falls with, so the higher the counterparty's credit rating, the better (AAA is the highest credit rating).