Structural product. Structured Products

I became interested in BCS SP structured bonds. The product is relatively new and is practically not discussed.
Let's try to figure out how this works, using XS1604405545 as an example.
The company buys a portfolio of Eurobonds with 5 leverage, that is, it is similar to an ETF with a fixed coupon.

Let's assume you have about 100k and you can buy 1 lot of Gazprom Eurobonds with a yield of about 6%. Need more profitability? We borrow another 400k and buy 5 lots. Provided that the debt is not more expensive than the coupon, this increases the yield. According to rough estimates, to make a profit when paying a coupon of 12.5%, the margin must cost no more than 3% - this is approximately at the level of treasuries (cool, where can I get those?).
Next, we diversify the bond portfolio by adding Eurobonds from a couple of banks and something else with a similar coupon.
The scheme looks quite reliable. The risks are generally clear:
- risks of the issuer BCS SP (Cyprus) and the BCS group of companies
- the risk of default for one of the companies whose securities were purchased in the portfolio (hard to imagine)

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• 14 February 2019, 18:14
• DR. LECTER
• Seal

At the forum, we were recently interested in a structured product from Sberbank, an exchange-traded bond BSO-OGZD_DIGIPRT-24m-001Р-02R,

Terms of issue can be viewed here: https://www.sberbank.com/common/img/uploaded/securities/emission/pbo/ogzd_digiprt-24m.pdf

The product is currently not very actively traded; the number of transactions on it is only a few units per day. The product itself is quite exotic and is a combination of a regular zero-coupon bond and a binary option with a bullish spread built into it. Obtaining additional profitability on the product depends on the behavior of quotes for Gazprom depositary receipts ADR.GAZP and the ruble/dollar exchange rate:

At a minimum you can get a denomination of 1000 rubles, at a maximum - 1253· α, where α is the ratio of USDRUB rates on the final and initial dates (now it is approximately 1.18) The final date is already close - the bond is redeemed on April 26, 2019. And it would seem that you can get almost 50% of the yield if the receipts are traded around 5.4 $. However, the bond is trading slightly above par. What's the catch?

This is largely due to the properties of binary options. Obtaining at least some yield on a bond is strictly tied to the condition that depositary receipts on the final date should cost more than they cost when the bonds were placed,

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After spending about 2 hours, I smoked it (I think), I don’t advise anyone to buy it and I think that the exchange should not have allowed such securities for trading.

What kind of animal is this?

Snowball coupon - means that subsequent coupons depend on the previous ones. For example, there may be a formula “previous coupon + 3% - LIBOR” and, accordingly, if the first coupon is 5%, and Libor is 4%, then the next coupon is 4%. And so on and so forth. But things are even more complicated for us

German Gref learns about new investment products

In December 2016, Sberbank offered the market a new investment instrument — exchange-traded structured bonds.

Sber posted the first issue in its history structured bonds for private investors. Before Sber, similar bonds were issued by BCS.

An exchange-traded structured bond is a security that: a) is traded on an exchange; b) guarantees the return of the invested amount and the possibility of receiving additional income, which depends on the dynamics of the underlying asset.

The underlying asset in this case is the dollar to ruble exchange rate USDRUB.

In general, this is a floating bond, unknown in advance, coupon income. Or a structured product with capital protection, issued under Russian law in the form of a security.

Sberbank's structured bonds are traded on the Moscow Exchange.

Investors (in theory) have the opportunity to buy and sell such bonds at any time. In addition, exchange-traded bonds are available for purchase in Individual Investment Accounts.

We study the terms of the product

The minimum investment amount is 1000 rubles.

The final yield is calculated using the USDRUB quote as of June 13 (4 business days before the maturity date).

Where is the profit?

The investor's profit arises if on June 13 the dollar exchange rate is ranging from 61.7 to 68.42. Moreover, the closer to the last value, the greater the potential coupon.

The most optimistic outcome — if the dollar rate rises and is close to 68.42 — then you can earn up to 21.84% per annum.

If on June 13 the dollar exchange rate is less than 61.7 rub./$, then investors will receive a coupon of 0.005% (that is, effectively zero). In other words, they will receive their invested funds back without any increase.

Similarly, if on June 13 the dollar exchange rate is above RUB 68.42/$(according to the formula 61.7 * 1.1089 = 68.42), investors will also not receive additional income, but will receive a return on the invested amount of 100.005%.

Approximate bond yield chart:

An example of calculating bond yield from a Sberbank presentation

Note:

• The dollar exchange rate values ​​on the X scale are conditional for example. Look at the graph itself.
• Profitability is indicated in % per annum (to calculate income in absolute terms for 6 months, divide the yield along the Y axis by 2).

This is the “shark fin” that Sberbank offered to investors.

More details:

- terms and conditions of the security in simple language on the Sberbank website.

- a boring document with very detailed conditions.

Who bought it?

It is reported that the bank placed (sold to investors on the primary market) bonds worth 456 million rubles. They wanted to sell it for 1 billion, but there was no such demand.

At the same time, 550 Sber clients took part in the placement (not a small number for the first attempt). Thus, the average purchase amount was 830,000 rubles/customer.

Expert opinion

Jan Dohodny, Portfolio Manager

Russian Bond - senseless and merciless

This instrument could be of interest to investors who expect a moderate devaluation of the ruble to levels of 66–68 rubles/$ by the summer and want to make some money on this. Popular idea. However, the devil is in the details.

We invest rubles in these bonds. And we calculate the potential profitability in rubles as well.

The reality is that using this instrument to earn an income that exceeds the semi-annual bank interest in the same Sberbank or the yield on OFZ is unlikely.

If you look at the historical distribution of the USDRUB price, you can calculate that probability earn a rate on these bonds that is at least higher than 8% per annum — about 15%. That is, according to statistics, you will be lucky in one case out of 7.

The liquidity of the instrument also raises questions. There is virtually no secondary market on the exchange, which means you will have to hold the instrument until maturity. It’s a shame, if the USDRUB rate rises, for example, to 68 in the spring, then most likely there will be no opportunity to lock in the achieved profit. You can, of course, try to hedge somehow, but, firstly, hedging will kill most of the income, and secondly, this is not why you buy an exchange-traded bond, entrusting money to professionals to monitor the market daily and do such things. It would be great if Sberbank paid attention to maintaining liquidity in the secondary market.

Summary: the game is not worth the candle, the product is beneficial only for the issuer.

Personally, I would try to assemble such a product myself from exchange options for the dollar-ruble and OFZ. Or simply preferred to buy 2-3 year OFZs. Due to the increase in the exchange rate value of OFZs, investors can easily earn more than 10% per annum on them in 6 months. Not 21%, of course, but more realistic.

Grade: 3 out of 10.

Diogenes Strategsky, algoscientist

#FABALBALI

Any structured product, be it a bond note, life insurance or any other, can have only 2 origins: the provision of a service or intellectual property.

With intellectual property, everything is simple - it can be an author’s trading strategy on the market, an options strategy, or a statistical one. Anything that can be considered a product developed by an investment company that brings income to the client (in fact, it does not) and the company (but this is true). In any case, the client understands what the investment company takes their percentage for, especially if the commission is tied to the results of the product sold.

The service nature is always challenging. We are ready to overpay for the convenience of providing a certain service in the financial market. Suppose we are not ready to study the financial markets, trading terminal, terminology, etc. ourselves, but we want to get the benefits (goodies) from trading on the stock exchange. We pay a certain percentage, which goes towards infrastructure + legal security. Everything is clear here. What about dark structured products, which contain participation coefficients, expirations, settlement prices and other evil spirits that we do not understand? And, most importantly, how much are we willing to pay for this super service?

A structured note from Sberbank is not an unusual occurrence. This is a kind of bond for 6 months that promises income when the dollar exchange rate rises to a certain value and complete capital protection. This means that the client, in any case, will receive 100% of the invested funds (however, no one has canceled inflation), and if the dollar exchange rate increases by 6-7 rubles, then the annual return can approach 20%! The buyer is already rubbing his hands and waiting to go to #FabulousBali!

What's inside, or the asymmetry of profitability Client-Sberbank?

Sberbank is famous for its level of service, and this is, of course, a service investment product, and a very simple one at that. Inside, most likely, 95–97% of funds are placed in fixed income instruments: repos, swaps, loans, and finally, the rest goes to options transactions. Moreover, the maturity date of the bond almost coincides with the date of execution of option contracts on the Moscow Exchange. Coincidence? So I don’t think so.

I can’t say exactly which options were bought and sold by Sberbank, I can assume that this is a modified bull call spread option strategy, when call options with one strike are bought and sold with another.

Since the client is not a mammoth and will not become extinct, Sberbank boldly includes its own commission in the product, which will range from 4 to 24% per annum of the client’s deposited capital, depending on the dollar exchange rate on the bond maturity date.

Russian banks offer their clients to master new technologies for managing personal finances, which have long been practiced in the West. In the deposit operations segment, there are completely special solutions that simultaneously combine classic deposits and other investment instruments more typical of insurance, brokerage or management companies. Such an investment portfolio can be called differently - structured, complex, or index product. Its meaning is that while one part of the client’s money is guaranteed to increase its volume, being on a bank deposit, another part of it works, for example, in a more potential (in terms of profitability) mutual fund market.

Among structured banking products, the most common are investment ones (with the obligatory purchase of shares in investment funds) or insurance ones (when the client, in parallel with a short-term bank deposit, accumulates a fairly large amount of money over a long period of decades).

If we consider a citizen’s participation in accumulative life and health insurance, it differs somewhat from traditional savings banking programs not only in its long term (from about 5, more often from 10 to 30 years). A distinctive feature here is the non-guaranteed investment income (i.e., added value), as well as the option of early payment of the amount upon the occurrence of an insured event.

The advantages of mutual investments can turn into disadvantages under unfavorable circumstances in the stock market. Therefore, the investor either risks losing profits, or, on the contrary, wins several times more than the highest deposit interest in the bank. Typically, the bank guarantees at least the return of the investment share invested in the structured product, with which shares of mutual funds are purchased. In this sense, the largest funds cooperate with the bank, which build their strategy on the market, betting on “blue chips”, i.e. for highly liquid companies in the field of production, subsoil mining, finance, energy, etc. Moreover, a bank depositor does not have to be an “advanced” investor; all decisions in the stock market are made by management companies.

Thus, by diversifying personal savings and choosing a structured product, a depositor can receive not only increased profitability in the most reliable Russian banks. Other benefits await him in the form of unlimited investment income or the opportunity for much longer-term accumulation of family finances. It should be noted that wealthy people who have been using insurance and investment instruments for a long time often turn to a structured product.

NOMOS-Bank

The “Nomos-Investment Deposit” product divides the client’s funds into two parts: a classic bank deposit and mutual funds managed by the management company “NOMOS-BANK”. The investor himself decides where his shares will operate - on the stock market, bonds, gold or on an alternative developing market. To receive increased income, no less must be kept in a deposit account than in a mutual fund. Minimum for each of these two parts: 15 thousand rubles or 550 dollars or 500 euros. The deposit rate depends on the term: after a month -11.74% per annum in rubles or after 3 months - 9.89% in rubles, 5.09% in any foreign currency.

The term deposit “NOMOS-Insurance Deposit” allows you to receive an additional 13.25% in rubles and 6.6% in foreign currency, subject to the registration of an endowment life insurance policy (from 10 years) in the PPF “Generali Life Insurance”. The minimum contribution is from 60 thousand rubles or the equivalent in foreign currency.

Binbank

“Investment in the future” opens after registration of an insurance policy. For insurance, you can choose one of several investment programs with different conditions for accumulation and receiving additional income. For example, long-term investment in a savings or investment policy. Here funds are deposited gradually over a long period of time. At the end of the term, the investor receives not only the planned amount, but also investment income. Another program, “Capital Management,” suggests investing in rising oil prices, RTS shares, precious metals, and the BRICS index.

The terms of a bank deposit require a minimum amount of 100 thousand rubles. The contract is concluded for 366 days. An annual return of 13.25% is paid at the end. There are no additional fees.

Russian Standard Bank

Russian Standard Management Company manages several mutual funds. The bank's depositors have the opportunity to buy shares of the Catherine the Great precious metals fund or shares of Peter I or the Mutual Fund of mixed investments "Empire" through the investment product "Fabulous Investments". This deposit combines a classic deposit with a higher interest rate and mutual investments.

A certain share of the client’s total funds is invested in each of these instruments. For example, 70% remains in a bank account at 11-13%, and 30% is invested in mutual funds. Or another option, when all the money is divided into two equal parts, in this case the bank account grows by a slightly larger percentage of 11.5-13.5% per annum. The specific rate depends on the period (180-720 days) and the amount, the minimum of which is 30 thousand rubles.

Investment Republican Bank

Here they offer a choice of three deposits, combining classic bank deposits and other financial solutions for capital growth. Each deposit is opened in an amount of 10 thousand rubles, for a period of one year, at 11.5-12%.

The special terms of the “First Investment” agreement suggest that the amount of interest income on the deposit is accrued at the beginning of the term with its simultaneous transfer to the brokerage account for the purchase of Mosoblbank shares. The “Second Investment” deposit obliges you to purchase an amount of at least 50 thousand rubles. shares of such reliable and large companies as Gazprom, LUKOIL, Surgutneftegaz, etc., where dividends are paid to shareholders. Finally, in the “Third Investment” deposit in the amount of 30 thousand rubles. highly liquid bonds and shares are purchased through mutual funds.

Bank Uralsib

Investors of this bank can choose from two deposits “Deposit + Mutual Fund Conservative” and “Deposit + Mutual Fund Dynamic”, which differ in the set of stock instruments and very slightly in the size of deposit rates (9.1-11.5% in rubles or 1.7-2.7% in foreign currency). Both have the same terms (91, 181, 367 days) and minimum amounts (from 50 thousand rubles, 2 thousand dollars/euro). The volume of shares purchased must be no less than the deposit amount. There are no additional contributions specifically for the deposit.

The owner of the “Conservative” agreement invests in the mutual fund “UralSib Gold” and the “UralSib Fund Conservative”. The “Dynamic” deposit makes it possible to invest in mutual funds of both stocks and bonds, as well as make mixed investments in such well-known funds as “UralSib Oil and Gas”, “UralSib Metals of Russia”, “UralSib Energy Perspective”, etc.

Citibank

This bank also has two comprehensive products that combine a deposit and another investment instrument.

The first one offers to connect to cumulative life, health and disability insurance. The policy is issued for a period of 10 to 30 years, at the end of which the accumulated amount plus investment income is paid. The frequency of payment of contributions is quarterly, annually or other at the client’s choice. You can undergo a medical examination at the expense of the insurance company. A fixed-term bank deposit in this package is opened for 150 days at 11% in rubles or 5.5% in foreign currency.

Another agreement “Fixed-term (with investment products)” is concluded for 33 or 100 days at 6 or 7% per annum. Its stock instruments are managed by financial groups VTB, Sberbank, Alfa Capital, Deutsche UFG, TKB BNP Paribas, Uralsib.

Bank Rosgosstrah

The tariff schedule for the “Investment” deposit has four terms – 1, 3, 6, 12 months. In addition, the rate (10-11% per annum) also depends on the range of amounts, the minimum value of which is 25 thousand rubles. By the way, you can earn 11% in just 31 days if you invest more than 450 thousand rubles. Additional contributions are not accepted.

But first you need to purchase shares in an amount not less than the deposit amount. RGS Asset Management manages 9 funds that operate with assets such as bonds, stocks, index and sectoral funds, and mixed investments. Mutual fund specialists play on the rise and fall in the value of securities of leading companies in the Russian economy (blue chips), which have stable development forecasts in the field of oil, gas, metal ores and precious metals production.

Promsvyazbank

Due to the fact that the interest on the Financial Protection deposit is capitalized, the effective rate will increase to 11.57% in rubles and 6.7% in euros or dollars, although the investor can choose another form of payment - monthly annuity. An agreement for a period of one year is concluded for an amount of 1 million rubles or from 30 thousand in foreign currency. There are benefits for early termination of the agreement when the ruble rate drops to 7%.

A limit is set for the maximum deposit amount, which depends on the already accumulated contributions to the life and health insurance policy from IC Alliance ROSNO Life. The policy is purchased as part of the “Financial Protection of Loved Ones” program by Private Banking participants to implement personal and family plans. Clients have a guaranteed income on the accumulated sum insured after 5 or 30 years.

Nordea Bank

This capital bank can offer potential investors the “Your Future” deposit with the obligatory joining of one of the endowment life insurance programs in the Insurance Company “Alliance Life”. The deposit is opened no earlier than a month after purchasing the policy. The rates of this special deposit are higher than in other Nordey products. After a year, the investor will receive an additional 10.5%. The minimum rate of 9.5% is accrued after 3 months, and after six months 10%. The maximum for euros and dollars is 4% per annum. The minimum amount for savings is 30 thousand rubles.

Insurance company specialists will help you choose the best insurance program option. For example, the “Start in Life” financial plan is designed to invest in the future of children. For their parents, there is a Future Guarantee plan that allows them to save money by a certain age.

Raiffeisenbank

The tariff schedule of a Russian bank with purely Austrian capital contains several structured products designed for investments in mutual funds or savings insurance. You can choose from six deposits, each of which has its own term (30, 181 or 365 days), rate (maximum 10.5% in rubles or 8% per annum in euros/dollars after a month of validity of the deposit "Insurance premium (with an insurance period of 10 years)") and the minimum amount (from 15 thousand rubles or 500 euros/dollars).

A feature of the insurance policy is its term (from 6 to 30 years). Mutual funds where private investments are placed are managed by the same-named subsidiary of the Austrian financial group - Raiffeisen Capital Management Company.

At its core, structured products use a fairly simple idea, which is as follows. Let's assume that we find a bank that gives us 10% per annum in rubles. This means that from one million rubles a net income of 100 thousand is obtained - by investing this money in riskier investment products, the investor risks only his profit, while the main deposit remains untouched. True, with this approach it is necessary to take into account inflation, since the amount in rubles will lose part of its purchasing power after a year.

Consequently, when investing in structured products, the client's funds are divided into two components, one of which is usually noticeably larger than the other. The first, large part, is invested in fixed income instruments, such as bank deposits, bonds, bills or savings certificates; the risk part with increased returns can be stocks, shares of exchange-traded funds, futures, or even assets not related to finance (bet on political events - for example, the current situation with Greece).

There are four possible situations here. The first situation of complete capital protection is discussed above and shown in the figure on the left. In it, all profits (the size of the orange zone) will be invested in risky assets, which, if the outcome is favorable, can provide income 2-3 times higher than the standard growth of the deposit. Those. will turn into a light brown area. If the result is unfavorable, the deposit amount remains unchanged.

In the second situation, the investor can behave more riskily, allocating a part of the deposit to aggressive assets that is greater than bank profits (i.e., in our original example, more than 10%) in exchange for a potential increase in income. As a rule, this happens when the investor, for some reason, is confident in the future change of the asset in the direction he needs. The figure on the right shows a situation where an investor is ready to lose up to 10% of invested funds, allocating 20% ​​of the initial deposit to risky assets - capital protection is 90%. A favorable outcome here doubles the potential profit compared to the left figure, an unfavorable outcome leaves from 1 million rubles to 900 thousand.

Therefore, in terms of potential profitability, structured products represent a compromise between conservative and more aggressive investments:

There is a third situation, when some banks invest only part of the guaranteed profit in risky assets, which allows us to speak of a structured product as an instrument with guaranteed profitability. Those. The investor will receive a formal profit in rubles for any outcome of the risky part of the portfolio - although in an unfavorable case it will be less than inflation. This condition is partly related to Art. 834 of the Civil Code of the Russian Federation, which provides for the mandatory payment of interest on the deposit amount - some banks prefer to maintain structured products as a bank deposit. So it is better to check with the specific bank whether your structured product is subject to protection from the DIA. The general provision only says that individuals (compared to legal entities) in the event of bank bankruptcy will have a priority claim for repayment.

However, in addition to the described options, there are also those where the size of the client’s loss can potentially be equal to the deposit made. This is the most dangerous type. For example, these could be barrier structural products. Let's say a client invests in a pool of shares and makes a profit provided that none of them fall below a prescribed amount, say 30% of the last high. Breaking this barrier leads to losses proportional to the magnitude of the fall. Or it could be not a single stock, but an entire index of stocks - say, you are betting that the index of European shares will not fall below the value specified in the product. Or you can even bet that an asset will not exceed a certain value, or will remain within a certain interval. In other words, you come to a pure financial casino.

Participation rate

The coefficient is expressed either in numbers or as a percentage. It follows from the formula that the higher the coefficient, the greater the profit - but the greater the risk. In the case of CG > 1, we are usually talking about products using leverage (for example, futures).

Structured products of companies

From theory, you can move on to practice and see which companies and under what conditions offer similar products to investors (at the moment). Here is a small table

from which it can be seen that among the banks, the best offer in terms of the minimum entry threshold currently has the BCS company.

Structural notes

Structured notes can be considered a type of structured product, since the essence of the proposal remains unchanged - the division of capital into a base and a risk asset. As a financial instrument for an investor, notes appeared in the late 1960s in the USA - and the conditional difference between notes and the products discussed above can be considered the high entry threshold and the predominantly banking sector offering this service. At the same time, there may be surprises - for example, Trust Bank depositors lost their money when, succumbing to the persuasion of employees, they decided to transfer their funds from deposits to notes. Read more about this.

Why is a structured product dangerous?

The advantages of structured products include the opportunity to receive a potential income 2-3 times higher than a bank deposit, keeping your capital under protection and only risking not making a profit (however, the risk of bankruptcy of the issuer remains). Structured products are offered by many banks and companies, among which there are also offers with a relatively low entry threshold. However, you need to remember the following things:

• investment may only be available in rubles;

• the terms for which the products are offered (usually no more than three years) make the probability of income close to the toss of a coin;

• management company services are paid, although they are often built into the product;

• there is no ownership right to the structural product, i.e. all assets are registered in the name of the management company and in case of bankruptcy problems arise with the return of capital

To attract customers, banks come up with many marketing strategies. One of them is investing in They are positioned as a panacea in the financial market. Are these tools really that profitable or is it just another

The essence

Structured products are instruments that are designed to protect the initial investment and bring profit from the growth of assets. The uniqueness of the product lies in the combination of instruments that allow you to limit investment risk.

In conditions of financial instability, investing in foreign currency is dangerous due to sharp changes in the exchange rate, and in the stock market it is difficult due to high volatility. The situation is further complicated by the fact that it is necessary not only to preserve, but also to increase capital. The solution to the problem may be to invest in structured products that combine a high degree of asset protection and the possibility of receiving more profit than on a deposit.

The structural products market includes:

• deposits;
• Forex trading;
• banking metals;
• options and futures;
• mutual funds;
• real estate investments, etc.

A structured product is formed by combining assets with different levels of risk:

• deposits and shares;
• Central Bank of highly reliable and new companies;
• bonds and options;
• deposits and savings insurance, etc.

The ratio is selected so that the income from “reliable” assets covers possible losses.

Example

The structured product consists of 90% of a deposit with a yield of 10% per annum and 10% of shares of new companies with a yield of 300%. After purchasing a product, there are three possible scenarios.

If the shares fail, the interest on the deposit will compensate for the initial investment. In a year, the client will receive the same amount that he invested, without profit, but also without loss. If investments in the Central Bank bring the predicted 300%, then the total portfolio return will be 40%. If investments bring 2/3 of the planned profit, then the profitability of the product will be 30%, etc. That is, the selected shares play a key role, and risk-free investments serve as insurance against losses.

Subjects

Structured products in the financial market are offered by banks, dealing centers and AMCs. Bank products are considered the most reliable. At AMC you can select assets for “every taste”: from conservative to more risky. Portfolio investments of dealing centers are formed from risky and super-risky assets (for example, currency and options).

The purchase of an asset is accompanied by the signing of an agreement between the investor and the company. It clearly stated the amount, investment period, list of assets, risk level and other issues related to the transfer of funds.

Scheme of work

Wanting to preserve and increase temporarily available funds, individuals turn to a bank or investment company and purchase a structured product. The intermediary invests part of the invested funds in reliable financial instruments (bills, bonds, deposits), and the second in an asset tied to the base (stocks, currency), but less volatile (Sberbank shares, gold rate, RTS index, etc.) . The client himself chooses the underlying asset and the risk level, that is, the proportion of investments that will be redirected to the stock market. The client also independently regulates the participation coefficient (PF), that is, it establishes what part of future income he will receive.

The investment period ranges from several months to two years. Additionally, you can insure your investments or purchase an investment portfolio with coupon income. In the second case, the client will receive a fixed amount of profit monthly, which does not depend on changes in the price of the underlying asset.

Types of structured products

All package offers are divided into two groups:

• Risk-free products guarantee 100% capital return. The biggest risk is that by the time the investment is repaid, the investor may only have the original investment back, subject to a small degree of depreciation due to inflation. The client pays only for the opportunity to make a profit if all assets work out.
• Limited risk products. The share of assets is distributed so as to cover possible losses. An investor may only lose part of his capital. In a good market situation, earnings can reach 50% of the initial investment.

Advantages

• Structured products of Sberbank or any other credit institution are a passive investment. The client does not independently form a portfolio of assets. The financial intermediary does this work for him.
• There is no need for knowledge and experience in working with financial instruments.
• It is possible to regulate the level of investment losses and invest in assets that are not available in pure form.
• The structural properties of the product are such that the purchase of at least one of them means diversification of investments.
• With good market dynamics, the investor receives large profits with low risks.

Flaws

• Structured financial products are positioned in the market as something complex. In fact, this is a paid consultation on the issue of placing funds in different assets.
• Even banks cannot provide a 100% money back guarantee. All deposits are insured by the DIA. The possibility of loss always exists. The only question is the level of risk. This marketing slogan is designed for advertising purposes only.
• Structured bank products that do not make a profit are unprofitable. This means that interest on deposits was used to cover losses from other types of investment. If the client immediately deposited the entire amount of funds, he would receive more profit than from a unique product.
• Structured products are designed for wealthy clients. User reviews confirm this. Enter the financial market with an amount of 10 thousand rubles. doesn't make sense.
• Asset management services are paid. The commission is charged regardless of whether the investment generates income or not.
• Combination products are not covered by the government guarantee. If the bank or AMC goes bankrupt, the investor will not be able to recover his investment.
• There is practically no choice of unique products on the Russian market.
• The investor does not become the true owner of the assets, so he has no control over the investment.

Hidden risks

Structured products are combinations of assets and derivatives. They are collected and sold by world banks in the form of notes (bonds). They insure themselves by releasing positions that are opposite to structured products. The bank always receives a commission. Although each individual client makes money, it is from other clients who bought a riskier asset. Ultimately, all clients lose money. Therefore, in order to increase the attractiveness of new products, their risks are “encrypted”. What are banks silent about?

Barrier notes

If all selected shares hold their price above the specified limit, holders of the combination products will receive back their investment and the agreed return. The notes begin to work like bonds. If one of the selected assets declines in value, the value of the portfolio investment will be equal to the worst performing stock. The probability of a decline in the price of at least 1 of 3 shares is higher than of each one individually. Accordingly, the potential loss significantly exceeds the possible income.

Autocall

Portfolio investments are often sold with an additional option. What is the essence of autocall? If all the shares rise in price, the client will be able to purchase another note, and the banker will be able to receive additional income. When the market grows, once a quarter the banker receives a bonus, and the client receives a new coupon. This happens until one of the central banks drops to the set limit.

Another example is a credit note. The client will receive 100% of the increase in the price of the share, and if it decreases, a return of 100% of the invested amount. It is good if a not very volatile instrument is used as an asset. It turns out that part of the note, designed to provide capital protection, is invested in the stock exchange - 20%.

Distribution network

The problem is not only about risks. Banks cannot cover the entire market at once. Intermediaries come into play. Each link in the chain “bank - distributor - manager” earns on resale. The structure of unique products is such that the bank can recalculate the conditions for investing money at any time. It all depends on the seller. Someone will sell a coupon with a mandatory investment of 99.5% of the money, receiving only 0.5%, and someone will be able to sell a product with worse conditions and receive 5% immediately. The maximum difference can be 35%.

Intermediaries are more likely to sell riskier products. As a result, conservative portfolios are filled with barrier notes, autocalls, and after a year bring an 80% loss. During this time, bankers manage to receive 0.5% and another 4 times 3% commission for the purchase of a new note.

On a note that guarantees a return of 100% of an investment in the RTS stock index, the banker will earn twice as much. This structured product includes a call option on an index with a duration of two years (17%), a portfolio of illiquid bonds that, when redeemed, will yield 100% of the initial capital. The average market yield of the bond is 18%, of the entire portfolio - 62%. From such a transaction, the banker will receive 21%, the remaining 79% - the client.

Conclusion

Structured products are not a pyramid scheme. If you use such tools within reason, you can make a profitable deal. The same stock index in capital protection is appropriate if the credit risk is low. But most combined products lose in all respects only due to the inclusion of derivatives in them. In addition, no one has canceled the main rule of trading: the portfolio manager makes a profit together with the client, and the seller makes a profit on the client.