Why invest instructured investments?
Some of the main reasons why clients investin structured investments include:
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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.
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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.
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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.
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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.