Look anywhere for an answer to the question, 'what are structured products?', and you will find no single, common response. Investors and their advisors will be met with a range of options - from the individually-designed, to a diverse range of off-the-shelf offerings.
This is the point: they are bespoke investment vehicles, either tailored to meet the aims of a (necessarily, high net worth) individual, or intended for a general retail offering but with a risk/reward profile designed to achieve a specific set of objectives.
These objectives will generally combine an element of capital protection - possibly even a full return of capital guarantee - with a degree of participation in the return from a higher-performing, but riskier, underlying asset.
The variety in the design and the providers of these instruments counters the enquirer's original question with the fundamental consideration here: 'what do you want your structured investment to be?'
The London Stock Exchange (LSE) says that "the term 'structured products' simply refers to a group of financial instruments with varying terms, payout and risk profiles on a range of underlying assets." They fall into broad categories, not all of which are either available or suitable in the retail marketplace.
Ultimately, the product structure will be set out transparently in its literature, and the investor should be able to assess the maximum and minimum returns that could be expected. And if this is not the case, the investor should be very sure about the proposition they're considering.
This guide aims to explore some of the more common retail forms of this type of investment.