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Once upon a time, the retail investment world was a quiet, rather pleasant place where a small, distinguished group of trustees and asset managers devised prudent portfolios for their well-heeled clients within a narrowly defined range of high-quality debt and equity instruments. Financial innovation and the rise of the investor class changed all that.

One innovation that has gained traction as a supplement to traditional retail and institutional portfolios is the investment class broadly known as structured products. Structured products offer retail investors easy access to derivatives. This article provides an introduction to structured products, with a particular focus on their applicability in diversified retail portfolios.


  • Structured products are pre-packaged investments that normally include assets linked to interest plus one or more derivatives.

  • These products may take traditional securities such as an investment-grade bond and replace the usual payment features with non-traditional payoffs.

  • Structured products can be principal-guaranteed that issue returns on the maturity date.

  • The risks associated with structured products can be fairly complex—they may not be insured by the FDIC and they tend to lack liquidity.