- The History of Structured Products
- How Data Innovation Democratizes Structured Products
- The Value of Downside Protection in a Bear Market
- How Structured Products Provide Differentiated Exposure to the Underlying Asset
- Bringing Customization and Transparency to Structured Products
The global market is pushed and pulled by so many factors these days that investors have a difficult time knowing what to rely on for the safety and security of their financial future. A new Prime Minister that sends national currency plummeting. A pandemic that prompts massive layoffs and freezes business growth. An unprecedented streak of elevated interest rates. Multicontinental cyberterrorism attacks that create havoc on shipping logistics. The list of factors that can put what an investor will receive in jeopardy goes on. Market volatility is constantly at the whim of so many variables that financial advisors are needed now more than ever to navigate their clients through choppy waters that could sink their investments before they reach their maturity date. What can advisors do when a nervous client begins asking for guidance on structured products, finance alternatives, and new investment trends? The answer is simple: Start with what you know.
It was common knowledge that the wise way to direct investments was to use the tried-and-true 60/40 asset allocation formula with 60% of a portfolio in stocks and the remaining 40% in fixed income. This division has held steady for many decades because the best way people were driven to make their initial investments stayed just as steady. But over the past 30 years, the rapid advent of the Digital Age has brought about a vast change in how investments strategies are determined, researched, selected, and ultimately purchased. Financial products have needed to evolve in kind to handle this technological shift. The most recent advancements have focused on creating customized solutions that offer protection from downturns in the turbulent market as well as enhanced return potential. One of the newest and most popular solutions of late for meeting these investment objectives has been structured products. At first glance, this multi-layered investment asset may seem too complicated to spend time learning about, but once advisors find that at their core, these products are linked to the same market principals as conventional portfolio holdings, understanding structured products takes little more than knowing about the S&P 500 and Nasdaq 100.
Commonplace underliers are the building blocks that support structured products. Most (if not all) investors will have some sort of familiarity with household names like Amazon and Google; companies that are woven into the fabric of the daily consumer lifestyle. Conversations on what a structured product is can start here. Anchor the introduction of this asset class by bringing up familiar market names. Starting at the core of structured notes, i.e., direct link to the S&P 500, shows that they have a DNA very similar to traditional investments.
If the past is the best way to judge the future, the protection and return on principle that structured products offer are going to make them more and more popular. Structured product sales are hitting new highs year over year. Continual evolution in response to the increased demand means that the full potential of structured products has yet to be realized. They are the next generation of investment vehicles that are more suited to today’s economic landscape than the traditional market-driven indices from last century.
Luma is one of the world’s leading multi-issuer technology platforms for finding market-linked investments and streamlining the process of integrating structured products into diversified investor portfolios. Due to its non-biased objectivity, the Luma platform ensures that advisors have the financial instruments they need to search for, compare, and buy structured notes based solely on the specific needs and credit risk tolerances of their clients. As Luma’s technology improves, the more the platform is adopted into consistent use by the leading firms in financial management. Luma’s advanced analytics and innovative data modeling for structured products have been proven to provide clients with transparent, objective information about which investment products are best for each client’s unique financial goals. With a comprehensive Learning Center, Product Marketplace, Creation Hub, Lifecycle Manager, and Order Entry system, financial institutions and individual advisors can learn about, buy, create, and track structured products for a full end-to-end investment management experience, including customizable compliance solutions that leads to success by starting with what you know.