Friday, October 15, 2010

In the News: Structured Notes

Bloomberg issued a news release today reporting that the amount of sales and issuances of structured products had reached a record in 2010. The demand for higher yields and caution in investing in stock were factors which contributed to the growth in structured products. According to Bloomberg, a popular structured product was the step-up callable note, which is a callable note that increases (‘steps up’) its fixed rate over time. 

This calls for active analysis of the merits of structured products. We have commented on the complexity of structured products as early as 2005 (September 2005 blog). Since these complex instruments continue to sell well, then there is reason to believe that there are still investors out there who do not fully understand the inherent risks of these products. 
 
SLCG has a dedicated website providing papers, notes and calculation tools on a variety of structured products. We have also written several papers on structured products that can be found in our research section here.

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