Structured-Products

HOW TO CHOOSE
STRUCTURED PRODUCTS

Here are some factors to consider when you are investing in structured products:

Coupon Rate

This will give you an indication of the returns that you can expect from the investment.

Structured products usually come with a 'Maximum Coupon Rate'.

Participation Ratio

This refers to the degree to which you, as an investor,
will participate in the potential value increase or decrease of the underlying financial instrument.

The greater the participant ratio, the greater is the possibility of earning higher/lower returns (depending on market performance)

Term of Investment

Consider how long you want to invest your money because structured products are rarely traded after being issued.

That means your money is locked in. Rating of Underlying

Financial Instrument

The financial instruments that the structured product is based on should be rated highly
by independent, industry-recognised rating agencies (like CRISIL, CARE)

EXAMPLE
STRUCTURED PRODUCT INVESTMENT

Mr. Prabhakar's Structured Product Investment Mr. Prabhakar wanted an investment that would provide a monthly income.

He invested an amount of Rs. 1 lakh in a structured product for 2 years.

The value of the underlying financial instrument in the structured product increased by 30% over the 2 year period at a participant ratio of 60%. Therefore, on maturity, Mr. Prabhakar earned the following:

1,00,000 X 30% X 60% = Rs. 18,000

In addition, he received his initial investment amount of Rs. 1 lakh on maturity.

However, in the same case, if the value of the underlying financial instrument fell by 30% at a participant ratio of 60%, Mr. Prabhakar, on maturity, would receive only his initial investment amount of Rs. 1 lakh because the structured product is secured.