In economic terms, a structured product is the result of the union, in the same structure, of two or more financial instruments. Structured products are usually formed by combining a fixed income product plus one or more financial derivatives.
The financial derivative uses as a reference an asset called underlying asset. The underlying asset can be, for example, an exchange rate. Also an interest rate such as Euribor, or a stock index such as IBEX 35. Depending on the evolution of the underlying asset, a higher or lower return will be obtained with the structured product.
Structured products can be completely safe, guaranteeing the return of the investment capital. On the contrary, we also find structured risk products. In which the return on the investment depends directly on the evolution of the underlying asset.
Type of Structured Products
These are the classes of structured products that we can find in the financial marketcurrent.
The structured deposit usually has the guarantee of return of the capital. They are normally structured with a mixed return. Formed by a fixed and a variable interest. He storage area it is one of the safest structured products.
In the structured fund, the conditions for the capital depend directly on the underlying asset or assets selected, as well as on the date determined in the formalization of the fund.
The structured bond has a term that is previously set. The main difference between structured bond and structured deposit is that the former does not have the protection of the deposit guarantee fund, so it represents a greater risk for the investor. In this type of structured product, great profitability can be obtained. But they also end up losing 100% of the invested capital.