Why invest instructured investments?
Some of the main reasons why clients investin structured investments include:
Access to Unique Investment Theme
Investors may wish to invest into structured investments as they can sometimes enable exposure to the performance of a unique investment theme which an investor might find difficult to otherwise access directly through alternative investment platforms in Australia.
Higher Potential Investment Returns
Investors will often invest into structured investments because they want to obtain leverage to a current market trend or investment theme. This is typically because the investor wishes to generate a potentially higher level of investment return due to the leverage compared to what would be otherwise possible without the leverage.
For Hedging Purposes
Investors sometimes invest into leveraged structured investments for the purpose of hedging certain risks included within the investor’s existing portfolio of other financial products.
Diversification and Cost Efficiency
Investors may wish to invest into structured investments as they can sometimes bring a new source of potential diversification to an investor’s portfolio. When the structured investment is leveraged, this potential diversification benefit can be delivered at a lower upfront cost compared to an alternative investment into the same Reference Asset which is not leveraged but fully funded. This increase in diversification is therefore arguably obtained on a more cost efficient basis when obtained via a leveraged structured investment. Having said that, this improvement in cost efficiency does come with an increase in risks.