Structured products are an ideal solution for those who want to protect their capital, yet at the same time earn more money on it than is possible by simply leaving it in the bank. By using this innovative investment method, you can control the allocation of your funds to financial instruments based on the level of risk and reward that you require.
Alpari's clients can choose structured products based on the underlying assets of more than 20 currency pairs, gold, silver, indexes, shares, oil and agricultural products (wheat, corn and sugar amongst others).
Take advantage of some of the other opportunities that we offer:
If the investment amount exceeds 2,000 USD, you can open a Capital Account.
Not sure where to invest your funds? Take advantage of Alpari’s Investment Idea.
How Do Structured Products Work?
When you purchase a structured product, you are simultaneously investing in riskier and less risky assets:
The Low-risk Assets Limit the Downside: A portion of your capital is placed in fixed-income securities such as bank savings accounts and bonds. These investments deliver a steady profit and form a sort of "financial cushion" that can serve to guarantee that you will, at a minimum, get back your initial investment in full, even if your investment in the riskier variable-income securities doesn’t pan out.
The Riskier Assets Capture the Upside: The remainder of your capital is allocated in assets with a higher potential return on investment, but which carry a higher level of risk, such as options (financial instruments that allow you to buy or sell an asset at an agreed-upon price on an agreed-upon date in the future). This is the portion of your investment that is tied to the base asset. If things work out in your favor, the return from this portion will help deliver a sizable return on your initial investment in the structured product.
Investment in Low-risk Assets
Investment in Riskier Assets
Guaranteed Return from Low-risk Assets
Potential Return from Riskier Assets
Product with 100% "Capital Protection"Product with 90% "Capital Protection"
Product PurchaseProduct Maturity
Product PurchaseProduct Maturity
When selecting a structured product, there are 2 main parameters you should focus on:
The Capital Protection Level:
This is the percentage of your investment that you are guaranteed to get back when your structured product reaches maturity. You can set this level up to 100% (guaranteeing that you get back your investment in full).
By lowering the capital protection level to 90%, for example, you will be putting 10% of your money at risk, but your potential return on investment will increase significantly.
The Participation Rate:
This coefficient shows what percentage of the return from the base asset you will receive when the product reaches maturity (assuming your prediction about the base asset price has proven to be correct). Your participation rate is determined for you based on the parameters of your structured product. The main factors that determine this coefficient are the capital protection level and the product maturity date. The lower you set the capital protection level, the higher the participation rate will be, since a greater percentage of your investment will be allocated in riskier assets. Likewise, the further back you set the product maturity date, the higher the participation rate will be, seeing as the investment in fixed-income assets will be over a longer time period and at higher interest rates.
For example, with a participation rate of 0.74 (74%), a 30% rise in the price of the base asset will yield a 22.2% profit (0.74 × 30% = 22.2%).
A lower capital protection level and higher participation rate will give you a higher potential return on investment, and vice versa.
Have you decided which strategy to follow? Then it's already time to make your investment!