Diversify intelligently

Structured products are investment products that combine several financial instruments in a single, tradable product. In most cases, a bond is linked to a derivative component.

The derivative component is linked to the performance of one or more underlyings. Common underlyings include shares and share indices. However, there are also products linked to interest rates, commodities, investment funds or currencies.

Structured products can be an important building block for diversifying portfolios.

The combination of different financial instruments enables individual adjustment to the investor's risk/return profile. The aim is to find the ideal compromise between the pursuit of returns and the accepted risk.

The wide range of approved underlyings also makes it possible to invest in niche markets or markets that are difficult to access, such as commodities.

In view of the broad spectrum of structured investment solutions, there is no general answer to the question of risk.

So-called capital protection products even guarantee a minimum repayment at maturity - usually amounting to 100% of the invested capital.

Leverage products such as warrants or turbos react disproportionately to price movements - both when prices rise and when they fall. They therefore not only offer high potential returns, but also a greatly increased risk of loss.

Other structured products are associated with significantly lower risk. Partial protection products such as reverse convertibles or bonus certificates, for example, have built-in mechanisms designed to reduce the risk (compared to a direct investment in the underlying asset).

However, if there is an issuer risk, there may be a risk of total loss if the issuer becomes insolvent, even with capital protection products.

Bethmann Bank's Structured Products are based on the aforementioned partial and capital protection products, which we would like to explain in more detail here.

Capital protection products:

• Products with capital protection guarantee a minimum repayment at maturity. This is usually 100 percent of the invested capital.
• The products can either have an interest reference (e.g. fixed-rate bonds, variable-rate bonds) or enable participation in the positive performance of an underlying asset (capital protection certificates).
• Due to the guaranteed repayment of the invested capital, these products are primarily aimed at investors with a greater need for security and more moderate income expectations.
• If there is an issuer risk, there is a risk of total loss if the issuer becomes insolvent.

Partial protection products:

• With partial protection products, the repayment at maturity depends on the performance of the underlying asset.
• The products usually offer an upwardly limited but nevertheless attractive potential return. In return, they offer partial protection as long as the underlying asset does not fall below a predefined threshold.
• Partial protection products can also generate an attractive return when markets are trending sideways and are therefore particularly suitable for investors who have neutral market expectations.
• Partial protection products include express certificates, reverse convertibles, discount certificates and bonus certificates.
• If there is an issuer risk, there is a risk of total loss if the issuer becomes insolvent.