Redemption of the Structured Note
Deshalb hält sich ein Value Investor derzeit dennoch fern von Aktien. This means it does not matter whether investors expect the market to develop sideways, positively, or negatively, because they can tailor structured products to their own requirements. The risk can be mitigated if the investor avoids selecting a large concentration of products from the same issuer.
We advise on the tax as well as the regulatory and legal aspects of offers to retail, HNWIs, private banks their distributors. In addition to European retail structured products we have lawyers in Asia and the Middle East with experience in similar products in their regions.
Our retail structured products practice is part of our international financial markets practice which comprises more than lawyers worldwide specialising in advising financial institutions, who together have a thorough understanding of all aspects of the international financial markets.
The products we have recently worked on which have been offered to retail investors include: Capital Protected Notes linked to the Dow Jones Euro Stoxx 50 Index offered in France a series of Notes linked to Dutch shares offered in the Netherlands index linked notes offered in Belgium, Luxembourg, Netherlands and Switzerland a wide range of equity linked certificates and warrants offered in Germany Notes linked to a basket of commodities offered in Sweden various warrants over share baskets and indices in Norway, Finland and Sweden strategy linked notes in the Netherlands.
Structures we have a leading European retail structured products practice and have advised a number of European and US banks in connection with retail structured products. Notes, Warrants and Certificates we have extensive experience in domestic retail markets such as the certificates and warrants market in Germany.
New Retail Structures in response to the recent financial conditions we are advising on a variety of new structures offered to retail investors including issues by off-balance sheet special purpose vehicles, collateralised structures, asset backed securities and capital protected structures. This means that investors know how high the risk is for them from the outset.
With capital protection products, investors always try to achieve a greater return than they would with fixed-interest investments. Therefore, if market expectations are met, the investment will be worth it. Furthermore, the underlying asset of structured products is flexible, which opens up additional possibilities. The risk can be mitigated if the investor avoids selecting a large concentration of products from the same issuer.
However, concentration risks can also arise from underlying assets. For example, many barrier reverse convertibles in client portfolios contain the same single stocks. This was also the case during the financial crisis, where bank shares in structured products were often above average.
It is therefore imperative to ensure that individual securities in the portfolio and issuers are well diversified. The most important thing is to know your personal risk tolerance and market expectations.
From here, you can decide which products are worth considering. Only then should you select a suitable underlying asset. What is the current situation?
If investors want to invest a higher amount in structured products, it is also worth staggering this over several months or quarters, as the coupon amount of structured products essentially depends on the volatility.
If uncertainty in the markets is high, the coupon can be more than twice as high as when the markets are stable. For barrier reverse convertibles, investors should always keep the barrier at the same level.
Especially after market corrections, investors tend to lower the barrier as a cushion. However, it is important to stick to your predefined goals even in periods of market uncertainty. Typically, the compensation would, indeed, be higher but this would be counteracted by a lower barrier. This also applies in the opposite case.
Even if the coupons are low, the barrier should not always be further raised. My second piece of advice is to actively monitor your products throughout their terms. Investors must be prepared to sell a product earlier than planned, and in an emergency at a loss, if the product is nearing the barrier and the forecast for the underlying asset is negative.
Conversely, depending on the performance, it can also be worthwhile to sell a product, which is a long way from the barrier, if there is potential for a greater return with a different product. An important signal for reassessing your investments is uncertainty regarding increased volatility on the markets. At this point, it is a good idea to check whether a different product would be more profitable and whether an existing product should, at best, be sold early.
Typical events include meetings of national banks, elections, and referendums, which can already bring about increased volatility in the run-up to the event. In terms of company-specific events, the best time is before quarterly or annual figures are released. Here at Credit Suisse, we actively advise clients of opportunities and ideas as part of our investment advisory services. One way to do this is with barrier reverse convertibles, the ultimate classic structured product.
Here, as far as possible, it is important to select underlying assets, which will not fall below the barrier. Together with our research experts, we define the "best picks" every month — securities that, according to our expectations, will not decline by more than 40 percent over the next 18 months. Combined with a higher coupon amount, this can be a system that promises success. We offer a research alert for interested investors. There is no upper threshold.
It depends on the investor and the overall strategy. As you have the freedom to play with the entire spectrum, a percent share would theoretically be possible. In reality, however, only a proportion of fixed-income investments and share positions are usually covered by structured products. This is because investors often prefer direct investments, such as stocks and bonds, and use structured products for special scenarios, for example to achieve additional returns in the event of sideways-trending markets.
The field of structured products grew strongly before the financial crisis. However, the collapse of the U. Increasingly complex products, the structure of which investors no longer understood, discredited the asset class. For several years now, however, we have seen a renewed interest in and increased volumes of these products.
Undoubtedly, one of the reasons for this is that the products are once again easy to understand and the costs are transparent.