What you can own
Structured product
A packaged investment combining a bond with derivatives to produce a defined payoff.
How it works
Typical forms promise capital protection with limited upside, or enhanced income in exchange for accepting downside below a barrier.
The payoff is defined precisely in the documentation, and the economics are set by the issuer, who prices in a margin that is rarely disclosed.
Where it misleads people
Capital protection depends on the issuer staying solvent — it is a promise, not a guarantee. Structured products also lock up money, carry embedded costs, and are usually hard to sell before maturity.
Related terms
- DerivativeA contract whose value comes from the price of something else.
- Counterparty riskThe risk that the other side of a contract fails to do what it promised.
- OptionA contract giving the right, but not the obligation, to buy or sell something at a set price by a set date.
- Liquidity riskThe risk of not being able to sell when you want to, without accepting a bad price.
Mentioned in
More in What you can own
All 10 What you can own terms · The full glossary, 433 terms
Educational reference only. Nothing here is investment advice or a recommendation to buy or sell anything, and tax treatment depends on your own circumstances and the country you are in.