The role of structured investment products in a diversified portfolio
The aftermath of the Brexit vote, the US presidential elections and political uncertainty at home have created a difficult environment for South African investors. These events make the case for a well-diversified portfolio to protect against the shocks the world can bring. Investors looking to diversify may wish to consider structured investment products to achieve their diversification goals. These products often provide an uncorrelated complement to a traditional investment portfolio by reducing volatility and thereby improving the portfolio’s risk profile. Indeed, they provide a pre-packaged solution for investors to meet specific investment needs that cannot be achieved through standard investments available in the marketplace, such as shares or bonds. For example, some structured products provide protection against drops in share prices; some deliver geared returns that increase faster than share prices themselves; and some can provide positive returns even if share prices do ...
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