Colin Mclachlan: The impact of volatility on structured product returns

Why ‘kick-out’ products now dominate

clock • 6 min read

Since the collapse in interest rate levels following the financial crisis, the major driver in the pricing of structured products has been around changes in volatility. Colin Mclachlan takes a closer look

Those of you who advise on using UK structured products in your portfolio construction will know providers launch new investment offerings on a regular but discrete basis, mostly for a limited period only. More often than not, each launch remains the same in all facets but one - the headline rate. The change in headline rate is best summarised as being the effect of net changes in the pricing environment from one issue to the next. So what drives the difference in returns offered from one launch to the next? Why would a product launched in June have better or worse terms than a similar p...

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