Uploaded by : DreamGains Financials, Posted on : 12 Aug 2016


A structured product is a kind of fixed-term investment whose payout depends on the performance of something else, like a stock market index. There are two main types of structured products:

1) Structured Deposits

2) Structured Investments

Structured Products is a collective term for both Structured Investment Products and Structured Deposits.


  • Structured deposits are savings accounts, offered from time to time by some banks, building societies and National Savings and investments, where the rate of interest you get depends on how the stock market index or other measure performs.
  • If the stock market falls, you will usually get no interest at all.
  • But unlike structured investments the money you originally invest has the same protection as you get with any other savings account.
  • Structured Deposits are always designed to return at least the initial amount deposited.


  • Structured Investments are commonly offered by insurance companies and banks.
  • Your money typically buys two underlying investments, one to protect your capital and other to provide the bonus.
  • The return you get depends on how the stock market index or other measure performs.
  • In addition, if it performs badly or the firms providing the underlying investments fail, you may lose some or all of your original investment.

Structured Products (both Structured Investment Products and Structured Deposits) can provide investors with features that cannot be achieved through “standard” investments such as shares or bonds. For example, some structured products provide protection against drops in share prices; some deliver returns that increase faster than share prices themselves; and some can provide positive returns even if share prices do not increase at all.

Structured Products are sometimes designed to provide a tax-efficient  outcome for the typical investor, for example, using the tax benefits of ISA’s, SIPP’s, Off-shore bonds and Capital Gains Tax allowances. This doesn’t mean that a product will be tax-efficient for everyone.

Structured Products are often used as part of a wider investment portfolio. In combination with standard investments, Structured products can make a portfolios returns better match your needs, for example, by reducing your exposure to negative returns.



  • Structured Deposits (and some structured Investment products) are designed with the aim of returning at least your initial investment, regardless of share prices. But that protection normally only applies at the end of the product life; if you need to access your money early then you may get back less than your initial investment.


  • Some products are designed with the aim of creating returns that increase faster than share prices themselves.


  • Some products are designed with the aim of generating income. Normally either your initial investment or the income itself is at risk to the share prices performing badly.



  • In some structured Investment products, you also risk losing a proportion or all of your initial investment. Sometimes this risk is somewhat mitigated against a drop in prices to a certain level (typically 50%). This is often referred to as “soft” protection.
  • However, if share prices drop beyond this level the protection is cancelled, meaning that you will most likely lose money.


  • Many products have an upper limit on the maximum possible return. This means that if share prices perform very well, or if there is a significant amount of inflation, your investment returns may not be so attractive and you could lose money in real terms.


  • Structured products typically do not pay dividends.


  • Some products have a “kick out” feature, which means that they can end early if share prices perform well, but also might run their full life if prices do not perform so well. These products are only likely to be suitable if you can afford to be flexible on the timing of your product return.



  • The Qualities of structured products – defined outcomes based on defined market conditions, plus potentially a degree of capital protection, and the ability to deliver in flat or even falling markets.

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