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Structured products have shed the stigma of the precipice bond era, provider Keydata Investment Services has claimed, while Skandia UK has announced inflows into its Protected Portfolio Investment have nearly doubled so far this year.

Inflows into the Skandia product in the first quarter of 2008 were up 152 per cent on the first quarter of 2007.

Graham Bentley, head of investment marketing at Skandia, said the capital protection of structured products had attracted investors due to recent market turbulence.

Mark Owen, sales and strategy director at Keydata, said interest in structured products had now spread to mainstream retail channels.

He added: "Structured products are very popular with private banks. What we've seen is a lot of good ideas coming out of the private banking sector and forcing themselves into the intermediary sector."

Structured products were also increasingly flexible, Mr Owen argued, with a wide range of asset classes and exit strategies. "People take profits on non-structured funds, yet they don't look at structured products in those terms in their earlier days," he said.

He also indicated improvements in funds' capital protection structure. Providers had stopped pricing funds in the middle of the day, which meant they had a greater chance of falling below the levels needed to support guarantees to investors. "What you're now seeing is far cleaner pricing."

He urged investors to consider the advantages of lighter capital protection and ensure the prospect of better returns. "If you think equities might fall by 50 per cent, you should only be in cash."

But Mr Owen observed the mandatory warnings on structured capital-at-risk products remained an impediment to investing in them, despite their recent popularity.

"People say it's too risky. But why is it riskier than an open-ended fund?" he said. "Most of the products that are coming to the marketplace are doing what they said they would."

Mr Owen said structured product investors demanded much higher credit ratings of their investment bank counterparties than of the issuers in a corporate bond fund. But he said market conditions had also forced him to be careful with his investment bank counterparties.

He pointed out some of the investment banks at risk from the liquidity crisis at one time raised the fees they were offering from 6 per cent to 8 per cent. "We saw certain banks desperate to get investors' money where the pricing was out of line with the market. At this point we realised something was wrong."

Keydata writes once a month to all its counterparties to ensure their credit ratings and operations remained stable.