Momentum builds for structured products

Investors should insure retirement income

By Victoria Papandrea
Fri 03 Jul 2009

Steady momentum builds for structured products as cautious investors look to invest as the market corrects.

The demand for capital protection and structured products has risen as investors look to invest their money as the market corrects, according to Commonwealth Bank head of structured investments Suzanne Salter.

"It has definitely picked up," Salter told InvestorDaily.

"The dust is starting to settle, the index is very close to a symbolic 4000 level and people are starting to think, 'well we know we have to get back into investing at some stage', so it corresponds to a main psychological demand of just having that capital protection.

"I think it's an asset class or a category that will probably see stronger inflows than other traditional classes just because it has that [protection] feature."

In a low interest rate environment structured products also provide a strong value proposition for investors, Salter said.

"This asset class will really benefit when people start getting back on the horse," she said.

"The analogy I use is, you have your house as your major investment and you always have house insurance. You even have car insurance on your car. This is your retirement money - if you're insuring your other assets, why aren't you insuring your stock portfolio?"

Structured investments can also provide flexibility to the investor, Salter said.

"You can fiddle with them and have different levels of capital protection, you can put in the coupons or choose to not have the coupons," she said.

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