Structured Products in Wealth Management

CHAPTER 4

Using Structured Products in Wealth Management

The first three chapters prepared the groundwork for the topic of this chapter. Chapter 1 focused on derivatives and Chapter 2 on structured products. After describing an integrated investment process in Chapter 3, this chapter now turns to the use of derivatives, and structured products in particular, in wealth management.

Introduction

The range of structured products available on the market has increased enormously in recent years. Derivative products appear in the media on an almost daily basis. However, relatively little importance is attached to the systematic use of structured products in constructing and optimizing portfolios. This chapter seeks to close this gap. It will show how structured products, futures and options can be used in a meaningful and consistent way within an integrated investment process. They represent an important component of modern integrated portfolio management. This approach differs from the pure sales-driven issuance of products. Our emphasis, hence, is placed on the application of structured products, which are further supplemented by futures and options.

The characteristics of structured products can be used to optimize the management of portfolios. With their help, it is possible to create risk/return profiles that are difficult to realize using conventional investments such as stocks and bonds. Structured products are suitable for investors with a variety of market expectations and needs: ...