Putting Manners on Markets: Stepping Into Investing Without Stepping Outside Your Comfort Zone

In today’s uncertain environment, many investors are caught between two competing desires: the potential for higher returns and the peace of mind that comes with capital protection.

For clients who are cautious about market volatility but frustrated by the ultra-low yields on deposits, capital protected structured products offer a compelling middle ground. Especially when issued by an A-rated counterparty, these investments provide 100% capital security at maturity—while giving you a real shot at outperforming traditional deposit rates.

 

Why Consider Structured Products?

Structured investments are typically designed to track the performance of an index (such as the S&P 500, EuroStoxx 50, or MSCI World) but with a ceiling on the maximum return. This “cap” is the trade-off for the capital protection—but for risk-averse investors, it’s often worth it.

Over a typical 5-year term, the product allows you to benefit from some of the market’s upside while eliminating the risk of loss, provided you hold it to maturity and the counterparty does not default on their obligations.

Think of it as dipping your toe into the market, without diving in head-first.

 

Deposit-Like Security, Investment-Like Potential

Unlike direct equity investments—where both return and capital are at risk—hard capital protected structured products give you certainty of capital. While the maximum return is limited, this approach offers a level of predictability and peace of mind that markets alone can’t.

✅ Deposits give certainty of capital and return.

✅ Structured products give certainty of capital, but not return.

❌ Direct investments offer neither, albeit have higher long term growth potential.

 

 

The chart above shows how a structured product shadows the index. When the market drops below your initial investment amount, your capital remains intact. When the market rises, you participate—up to a cap. It’s a structured way to approach investing that fits especially well for those more concerned with downside risk than chasing maximum returns. If you are happy with the parameters its a good deposit alternative. If you want potential for higher growth, buy the index/asset directly but forego your capital security.

 

What Could This Look Like in Practice?

See below as an example of the potential return scenarios for an investor who placed €100,000 into a Structured Product with:

• 110% participation rate on any positive market performance
• 100% capital protection at maturity

This means that if the underlying index performs positively, the investor gains 110% of that return, up to a maximum return cap of 40%. However, if the index performs negatively over the term, the investor’s capital is fully protected—no loss is incurred.

The table below illustrates a variety of index return outcomes and the corresponding investor returns. Whether the index falls 30% or rises 25%, the structured product adjusts accordingly—offering upside potential with downside protection.

 

 

The Bottom Line

While investing directly in an index or asset is likely to generate stronger returns over the long run, not every investor is comfortable with full market exposure. If you prioritise capital preservation over chasing the highest possible gains, structured products can offer the best of both worlds: a safety net for your capital, with the potential to outperform deposits. Another possible advantage of structured products is that they provide exposure to the performance of an index or ETF, while allowing any gains to be taxed under Capital Gains Tax (CGT) at 33% (usually not always), rather than the higher Exit Tax rate of 41%.

If you are interested in such an investment, its crucial to get impartial, professional advice as not all structured products are created equally!

Selecting the right product, with the right counterparty is essential.