Structured Products: Myths vs. Facts

Structured products often spark curiosity and sometimes confusion. They’ve long been perceived as complex, opaque, or only for institutional investors. In today’s market, they’re becoming more mainstream for accredited investors seeking customisable risk-reward exposure.  

Let’s separate myth from reality.

Myth #1: Structured products are too complex for individual investors

✅ Fact: Structured products can be designed with predefined terms and simplicity in mind.

While certain structures can be more advanced, many are designed with clear terms and predefined conditions. One common example, fixed coupon notes, pays fixed coupons and may automatically mature early under certain conditions.

Example: Autocallable Fixed Coupon Note with 7% p.a. monthly coupon linked to S&P 500 and 80% strike
This note pays a 7% p.a. coupon, which works out to be approximately 0.5833% monthly, independent of the performance of the performance of the S&P 500. On scheduled observation dates, if the index is at or above its knock-out level, the note is automatically called, and you receive your full principal early—plus the final coupon. If not called, you continue to earn coupons. At maturity, as long as the index hasn't fallen below the 80% strike, you receive 100% of your principal back. It combines regular income with potential early exit and a defined downside threshold.

Myth #2: Structured products are only useful in bull markets

✅ Fact: Structured products can be designed for practically any market view.

Whether you’re bullish, bearish, or neutral, structured products can be structured to align with your outlook.

️Example: Fixed Coupon Note with 8% p.a. monthly coupon linked to Apple and 60% strike

You have a slightly bearish view on Apple and invest in a note that pays a fixed 8% annualised coupon, distributed monthly. Even if the stock remains flat or declines moderately, you continue receiving regular income. The structure offers a buffer against short-term market dips, making it a useful tool for generating yield when you expect limited upside.

Myth #3: All structured products put your entire principal at risk

✅ Fact: Many structured products are designed with built-in downside protection.

While some structured products do carry full principal risk, others offer features like minimum redemption to help manage market volatility. Like any investment, it’s important to understand the terms but the idea that all structured products lead to total loss is a common misconception.

Example: Minimum Redemption Note with 90% minimum redemption at maturity
This note ensures that, subject to the creditworthiness of the issuer, investors receive at least 90% of their principal back at maturity, even if the market moves against the investor. At the same time, it offers the chance to participate in upside performance beyond a certain level. It’s a structured approach for investors who want growth potential with a measure of downside cushioning.

Other Minimum Redemption Notes may offer a conditional coupon linked to some predefined market outcomes.

Myth #4: Structured products perform poorly in volatile markets

✅ Fact: Volatility can actually enhance structured product terms.

When markets are volatile, issuers are often able to offer enhanced terms, such as higher coupons or lower strike levels. Periods of uncertainty can potentially create better pricing for investors, especially when the product has clearly defined outcomes.

Example: Dual Currency Note (DCN) with 10% p.a. coupon
You hold USD and are open to receiving SGD. In a volatile currency environment, this Dual Currency Note offers a 10% annualised coupon as compensation for taking on FX conversion risk. In a less volatile market, the coupon would typically be lower, assuming all other factors remain the same. At maturity, if SGD weakens beyond a predefined level, you're repaid in SGD. If not, you're repaid in USDalong with the full coupon. This structure allows you to earn enhanced income while gaining potential exposure to a second currency, making it a useful strategy in uncertain FX markets.

Myth #5: Structured products tie up your money for too long

✅ Fact: Many structured products offer short to mid-term durations, and some have open-ended structures.

While some are longer-dated, many structured products mature in under a year or even allow for early exit. For investors who prefer defined timeframes and outcomes, they can offer greater flexibility than commonly assumed. Others, like open-ended tracker certificates, have no fixed maturity and can be bought or sold on any trading day, offering the kind of flexibility typically associated with public markets.

Example: Open-ended Tracker Certificate
This tracker certificate gives exposure to a basket of selected stocks, with daily liquidity. It allows investors to take short-term tactical positions without locking up capital for years, making it ideal for adding flexibility to a portfolio.

The Takeaway

Structured products aren’t a one-size-fits-all solutionbut they’re far from the mysterious black box they’re sometimes made out to be. With the right understanding and platform, they can offer customisable, risk-managed exposure to market opportunities that may be hard to access elsewhere.

As with any investment, education and clarity are key. When used thoughtfully, structured products can be a powerful tool especially in today’s unpredictable markets.

This article is for general informational purposes only and has not been independently verified to ensure its accuracy and fairness. This article does not constitute any advice or recommendation from ADDX or ICHX Tech Pte. Ltd. (“ICHX”) or any of its affiliates. Please consult your own professional advisors about the suitability of any investment product/securities/ instruments for your investment objectives, financial situation and particular needs. No representation, warranty or other assurances of any kind, expressed or implied, is made with respect to the accuracy, completeness, adequacy, reliability validity or availability of any information in this article. Under no circumstance shall ADDX or ICHX bear any liability to the reader for any loss or damage of any kind incurred as a result of the use or reliance on any information provided in this article. This article may not be modified, reproduced, copied, distributed, in whole or in part and no commercial use or benefit may be derived from this article without the prior written permission of ADDX and ICHX. ADDX and ICHX reserve all rights to this article.