What is a Structured Product?
Structured products are hybrid investments typically comprising of two components — a note and a derivative, which is often an option. Also known as, Structured Notes, this unique hybrid investment combines growth potential with investment protection to offer you greater returns with minimal risks.
The first element in a Structured Product is a bond, which makes up most of the investment (typically 80%). The rest of your money is put into an Option – a financial instrument that's linked to the value of either a stock market index or the price of another asset, such as gold. It’s the bond that aims to provides capital protection, to ensure you get your original capital investment back partially or fully, depending on your personalized note, provided they are held until maturity and subject to credit risk of the issuer.
At Citigold, we offer both Non-principal and Principal Protected Structured Notes. A Principal Protected Structured Note offers guaranteed returns that are equivalent to your initial investment. On the other hand, a Non-Principal Protected Structured Product offers potentially higher returns on your investment but carries higher risks.
New Structured Products are launched regularly, offering a wide and diverse choice from low/medium risk capital protected structures to very high risk structures where there is potential for high returns on investment but also significant losses. So, they suit many investors and your Relationship Manager can advise which would best suit your investor profile and fit with your wealth management strategy.
Why would you consider Structured Products?
Structured Products are innovative and flexible investment products that will be suitable for you if you:
- want to diversify your portfolio with structured products that protect your principal and still offer the opportunity to realize higher rewards than a standard Time Deposit
- want the opportunity to invest in high-risk securities you wouldn't consider direct investment into, such as equities or commodities.
- can lock away your money for the term of the particular Structured Product (generally one to five years).
- can meet the minimum investment criteria to invest in a Structured Product.
- are prepared to accept that you may only receive the initial amount invested, if the option element of the Structured Product does not perform.