Structured Products in Wealth Management

Introduction

Structured products in the form of equity-linked derivatives have enjoyed a rapid rise in popularity. Creative and tailored investment solutions that formerly were available only to the institutional market are now being offered to private investors. As their usage spreads, so does the need to better understand these financial products, while the growing variety of products makes it increasingly difficult to maintain an overview. Additionally, employing such products in the investment process calls for a systematic methodology focused on clear objectives. Selecting and combining innovative new products at random can hardly result in outperformance.

While the list of specialized publications on the subject of derivatives such as options and futures as well as on traditional investment vehicles like stocks and bonds is seemingly endless, structured products have scarcely received any attention. Those wishing to find out how to use such products in a practical and efficient manner have come up empty handed. This book aims to fill this gap. It shows how to take strategic advantage of the specific characteristics of structured products within a methodically planned investment process.

The distinctive feature of structured products is their combination of an underlying asset – typically stocks or bonds – with a derivative component. A solid knowledge of the constituent parts of structured products is crucial to an understanding of how they function. Chapter 1 deals extensively ...