Structured Product

A structured product is a pre-packaged financial instrument that combines traditional assets, such as bonds, with derivatives to create a customized investment solution. Structured products are designed to meet specific investor needs, such as enhanced returns, capital protection, or exposure to particular assets like commodities, currencies, or indices. They are often used by sophisticated investors and can vary in complexity and risk, depending on the underlying components.

Example

An investor purchases a structured product that guarantees a return of their principal if a specific stock index remains within a set range but offers a higher return if the index rises above that range.