Investment funds is one of the preferred tools by a good part of the small and medium investors. But in its structured mode, it presents a format where profitability can be higher than in traditional models. However, it brings more risks in operations since it is a much more complex financial product that requires the knowledge of users. It is precisely for this reason that it is not suitable for all profiles of small and medium investors. But rather to those who have more experience in this kind of movement in the financial markets.
Structured products are definitely a very effective strategy to overcome the weak performance currently offered by banking products. For example, high-income accounts, term deposits or any other derivative of public debt. Where in all of them the level of 1% is barely exceeded as a consequence of the cheaper price of money in the euro zone. To the point that they are profitable products for savers in general
On the other hand, it should be noted that structured products are particularly characterized by their own structure, to the point that they are very different from more conventional investment funds. In this sense, they consist of the union of two or more financial products under the same design or structure. Typically, the most common is a combination of a fixed income product plus one or more derivatives. As a consequence of this approach, it is much more complex than the others. And as is logical to understand, they have a high risk since they do not guarantee a fixed return every year.
Types of structured products
If we adjust to the risk that this class of products can entail, we see that it can be differentiated into two very well defined groups and that they are the ones that we expose below:
Structured products with capital guarantee At maturity: are those financial products that are responsible for returning all of the invested capital at maturity. In any case, they are the ones that generate the least danger among small and medium investors since they are also regulated by the Bank of Spain itself and are covered by the Deposit Guarantee Fund. In practice, this means that they guarantee us up to 100.000 euros per person and product, as is the case with fixed-term bank deposits.
The other model, more complex of course, is the one that refers to structured products with risk. In this case, they are those that they have no capital guarantee at maturity and whose return will be conditioned by the evolution of the underlying asset. This is the determining factor that they are more complex and that they can even cause you to lose money in the positions that you have opened in them. As in the previous model, they are regulated by the Bank of Spain itself and are covered by the Deposit Guarantee Fund. It is the largest of the guarantees offered to their holders.
Fixed interest investment
If what you are looking for is security for your investment above other characteristics, this is a modality that can satisfy your longed for desires. Not in vain, you have to analyze that at the end of the day you will be investing your money in a deposit at fixed and guaranteed interest. But if what you want, on the contrary, is higher profitability, there are also formats that respect this decision within the structured deposit sector. That is, you will invest in a structured deposit at variable interest.
In the case of fixed deposit, profitability will always be guaranteed. While on the contrary, in the case of variable tank, the interest will be determined by the evolution of the indices of the asset in which the investment has been made. This is a substantial difference between the two investment strategies. But without leaving the same product, in what is one of its main characteristics with respect to other products intended for investment. A factor that can attract a good number of customers to these formats that have been designed by banks in recent years.
Fixed income every year
Another of the most relevant characteristics of this important banking product is its profitability. Because indeed, in general, guarantee up to 1% more than the value of the linked deposit, regardless of the type of investment chosen by the bank client himself. On the other hand, it must also be emphasized that in the event of death by accident, the additional benefit will be 51%. In fixed-rate deposits, on the other hand, it will be promoted by the guaranteed fixed interest rate, and in those structured by the evolution of the indices contemplated in each of the guarantee periods established in the linked asset.
On the other hand, it is very interesting to know what the associated life insurance covers. Well, in case death of the insured, the insurance offers an additional benefit of 1% of the assets linked to the investment, regardless of the cause of death, with limits based on age. In the case of death by accident, the additional benefit will be 51% of the investment value.
Recover the deposited capital
One of the questions that many of the possible holders of this financial product ask themselves is whether it is really possible to recover the money before expiration. Well, in this sense, it should be noted that in each issue the possibility of early redemption is specified. The redemption value will be based on the market value of the associated assets. However, it is possible that these investment models cannot be subscribed outside their commercialization period. And in which, there will be no choice but to wait for a new issue date in these guaranteed investment funds.
While on the contrary, there is also the real possibility that these funds may be formalized outside of the term periods. But with a serious drawback and that is that they may be penalized with very high commissions and above the usual. To the point that it can compromise the final profitability of this very special investment fund. Concluding that it is not a profitable operation, far from it. Rather, it carries an interest that is going to be very deficient from all points of view.
Types of guaranteed funds
Either way, this alternative to investing guarantees 100% of the investment participant initial. Although it is also highly valued the fact that in the end there may or may not be an extra profitability. Through two classes of investment strategies, which is represented by the fixed yield and of course the variable yield. Regarding the first of the formats, it should be noted that, in addition to the capital, the managing entity guarantees the obtaining of an additional return, normally expressed in an interest rate that can reach 1% or 2%.
With regard to variable return funds, the approaches are substantially different as you will see below. Because in effect, like those of fixed yield, guarantee the capital plus the possibility of obtaining an extra return based on the evolution of an index or share. In these scenarios, the strategy is based on achieving minimum targets with respect to the price of stocks, sectors or indices in the equity markets. In this sense, these funds are very similar to deposits linked to financial assets that are listed on equity markets.
Additional profitability?
Another of the most generalized approaches among small and medium-sized ones is the represents the statement of this question. Well, the main key is in the fact that they can or cannot meet a series of conditions to recover their initial outlay, without associated losses. In this sense, there will be no choice but to analyze in great detail everything related to its composition and structure since it can give you more than one surprise from these moments. It is not an easy product to handle and you will have no choice but to know its mechanics in some depth.
On the other hand, you should not forget that the so-called guaranteed funds are traded for a specific period of time, being in many cases impossible to be part of it once this marketing window is closed. From this scenario, it is necessary that you are advised before signing the contract for this special financial product so that you do not get any surprises from now on.
Just as it is necessary for the guarantee to be effective, and we will not see losses in our capital if market conditions are adverse. Where in most cases you will have to wait until the end of it. With terms of permanence that move in a range that goes from 3 to 5 years.