Structured Products = Alternative Investments ?

Aug 23, 2023 | Derivatives Theory and Practise, Products

Asset managers tend to classify structured products as “alternatives”. That is rather a classification by default than the consequence of any analysis. They have cash, fixed income, equities… and the rest, including structured products, is thrown into the alternatives bucket.

Some distributors, brokers, funds of structured products or wealth managers also promote structured products as alternative investments to their clients. By #alternativeinvestments , they suggest “alternative source of returns”… coming from alternative sources of risks.

When applied to most #structuredproducts (Reverse Convertible, Barrier Reverse Convertible, Autocallable, Capital protecte notes) with underlying equities, nothing is more wrong as the performance of the underlying equity is the key driver of those products.

 How can an unhedged put or call be an alternative investment? How can a 𝗱𝗲𝗿𝗶𝘃𝗮𝘁𝗶𝘃𝗲 𝗼𝗳 𝗫 become an 𝗮𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲 𝘁𝗼 𝗫 ?

Structured products obviously do not deserve to be called “alternative investments”. The minimum you would require is a very low beta to other asset classes. Structured products don’t deserve all the criticism they get from some parties, but neither do they deserve the unconditional laurels that others bestow on them!

Eric Barthe

Eric Barthe

Founder of

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