When assessing past and present structured products, it is clear that products have been offered that failed to meet investors’ expectations. For this reason, it is important that advisers have a clear understanding of what structured products are, and how to evaluate them. Below are the five most important things advisers should look for when determining whether a structured product is right for their client.
Every structured investment you encounter will probably rely on a single financial institution to deliver the returns offered, in just the same way as a fixed rate deposit does. What this means is that seeking a higher return from a riskier bank may mean that should the bank default, the client could potentially lose some of if not their entire investment. Always be clear on who the counterparty is and what the associated risks are. Product promoters should be transparent and be able to supply you with an up-to-date commentary, including credit ratings, CDS levels and general financial strength.
Volta Finance Ltd (LON:VTA) is a closed-ended limited liability company registered in Guernsey. Volta’s investment objectives are to seek to preserve capital across the credit cycle and to provide a stable stream of income to its Shareholders through dividends that it expects to distribute on a quarterly basis.
