Investec’s head of intermediary distribution of structured equity derivatives said “any discerning investor will be easily able to navigate” structured products, despite research by the firm showing that a third of investors would invest in them without any financial advice.
The poll conducted by Investec Structured Products also found a relatively large number of investors are comfortable with structured deposits, which protect investors’ capital, at 57 per cent as opposed to structured investments that do not, at 16 per cent.
Mr Dale said: “The reality is that reputable businesses within the structured products industry have no greater or lesser credit risk than the major players within the banking or fund management industries.
“So why accept lower returns, when there are suitable alternatives to bonds and direct equity investments with a modicum of additional risk?”
Investec’s research suggested only 16 per cent of investors are more concerned about credit risk – the danger of a product provider falling to repay capital or interest – than market risk on structured investments and deposits.
Meanwhile 29 per cent of investors said they were willing to take on credit risk on structured products, compared to only 3 per cent for market risk.
Adviser view
David Smith, wealth management director of London-based Bestinvest, said: “Structured products definitely fulfil a need and we use them as a matter of course in portfolios. But I dread to think of investors taking them on without financial advice.
“They can be very low in risk with good returns as long as markets do not drop by more than 50 per cent. If they do, investors’ capital can fall off a cliff. The key is to proceed with caution.”
