There is no single common definition of a 'structured product'. They are, by nature, a combination of products or arrangements put together to achieve a specific purpose, whether that be for an individual investor or as a retail investment product available to the general public. Consequently, each offering will have its own unique characteristics.
The aim of the structured product is defined at the outset, and this can be to provide income, capital growth, or a combination of both, over a pre-defined investment term.
In recent years, structured products have been available through a wide range of investment vehicles from pooled funds, medium term notes, special purpose vehicles and even deposit wrappers. They may also qualify as permitted investments to be included in standard retail wrappers such as ISAs and pensions. In many cases, though, it is not so much the tax wrapper that is important in determining suitability for an investor (although taxation treatment of that wrapper is always a consideration); it is the underlying investments used within it, what they seek to achieve, and the risks to which ...
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...e raised when PwC discovered that £103 million of investor’s funds had been misappropriated.
As a result of the scandal, many investors lost some or all of their capital. Some investors were able to submit claims through the FSCS although, at that time, the maximum claim was capped at £48,000.
The problems with Keydata - and the banking crisis as the whole - have severely dented consumer confidence in the financial services sector, and the implications are much more far-reaching than just for the structured products market.
Despite these problems, structured products have increased in popularity, with providers coming up with more innovative combinations of underlying asset mixes and a wider range of terms and guarantees. Such was the increase in these product offerings that the London Stock Exchange created a new market segment to accommodate them in May 2005.
More providers are designing and marketing new and inventive products. Much of the rising popularity of these products in recent years can be attributed to low interest rates and the increased volatility of stock markets around the world.
