its been a few years since structured financial products have been on the rise. structured notes protect the capital that is invested for a number of years, caps the maximum interest each year. a good alternative to bonds, since canadian bonds have not been doing so well due to higher interest rates. structures notes enable the investor to expose his portfolio to the stockmarket without too much risk. for example, one captial protected structured note from citigroup follows 8 different stock market indicies all over the world. it has compound interest capped out at 10% each year, a 2% MER at the purchase of the note, no other MER later on, and a vibrant secondary market where notes are sold 6 months to a year after purchase at 103% to 127% over stock price.
one of the negative aspects is that if the markets are negative, the interest will be negative, so clients will have to wait until the note matures before cashing in only the guaranteed capital. still, not a lot of investments guarantee capital, so this might be a nice alternative to stocks and bonds.