Structured products are sky high
With some analysts estimating demand in Australia for structured products will increase threefold in the next three years, it would seem the sky is the limit when it comes to this emerging asset class
“[Structured products] are only restricted by the imagination of people. I think [structured products] are only going to evolve based on how restricted people want to be,” Carlos Becerra, head of products and marketing at ANZ Private Bank, said.
Speaking yesterday at the Structured Products World conference in Sydney, Becerra described structured products as building blocks.
“Structured products are a combination of building blocks designed to deliver a particular outcome under defined parameters,” Becerra said.
Becerra said the objective of structured products is to create a product where the risk profile is less than the aggregate risk of the combined parts.
The most common aspect of structured products is their propensity to provide “perceived high risk/high volatility assets or sectors in a capital guaranteed package”.
Becerra said protection, synthesised exposure, leverage and reference assets were also common characteristics of structured products.
Becerra said most structured products have some form of protection, but most people are still unaware of the danger in investing.
“People don’t really understand what they are getting into,” Becerra said.
But Becerra said with the right advice, structured products can give investors access to new exposures and the ability to solve a particular client issue.
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