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What are growth-focused structured investments?


Growth-focused structured investments are custom-issued investment products that can provide investors with indirect exposure to underlying indices or assets.

The return of public equities, through indices, ETFs, single stocks, commodities, or currencies can be indirectly accessed via a structured solution, which may expand an investor’s opportunity set. These products can be approximately replicated through the combination of an underlying asset-linked derivative, with the equivalent of a zero-coupon bond. This combination can work to either provide principal repayment at maturity or offer continual downside protection through to maturity. These methods for downside protection are typically outlined in the terms of the product along with other specifications such as the participation rate, maximum payment, minimum payment, and time to maturity.

Structured solutions are not an asset class, rather they are an implementation tool for client portfolios that can be tailored to express a particular view on the markets or enhance a portfolio’s outcome. Structured solutions may provide similar characteristics to alternative asset-allocated portfolios while seeking to capitalize on public market assets such as equities.

An investor considering an investment in growth-focused structured investments should carefully consider any materials describing such a product, and its risks, including but not limited to the following specific risks:

  • market risk

  • credit risk

  • illiquidity risk

  • capped return

  • no direct ownership of the underlying assets

  • returns may underperform broader market

  • tax considerations

  • origination costs

  • no dividends or interest payments

If you would like to learn more about growth-focused structured investments, the deep dive of this article is available by logging into the CAIS Platform.

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