Guaranteed evolution

European retail investors still insist on principal protection for structured investment products. But simple bond-based structures used in the past are no longer economical. Is this the new frontier of structured product innovation? John Ferry reports

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Billions of euros of structured investment products have been sold into the Europeanmass affluent and retail markets in recent years. Almost all have come with sometype of principal protection. While in some cases that guarantee has turned outto be ephemeral (see page 2), the presence of some capital support is widelyseen as a prerequisite for structured deals to sell.

“Some people are looking again at products that are not completely capital guaranteed,but my experience is that in the mass

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