Tutorial: Structured products as alternative investments


What are structured products as alternative investments?

A structured product as alternative investment allows you to participate in the performance of a fund of funds with a small minimum investment contribution. The underlying of this structured product is a broadly diversified fund of hedge funds investing in hedge funds that follow a whole range of different strategies, depending on the investment focus. This makes it possible to achieve positive returns not only in rising, but also in falling markets.

How do structured products as alternative investments work?

The price of the structured product depends on the performance of the underlying fund of funds. The structure of the fund of funds and the question of what strategies should be followed is decided by the specialists of the Alternative Investments team of Erste Group Bank.

The structured products are partially issued with a capital guarantee. Should the underlying fund of funds against all expectations record a negative performance, the product is converted into a zero-coupon bond. This way the 100% capital guarantee ensures that at the end of maturity you get at least the capital invested back.

Your benefits

We recommend a structured product as alternative investment especially if you wish to diversify an existing portfolio with alternative investments. This way you can achieve positive returns even in falling markets. The capital guarantee lowers the risk which tends to be higher for hedge funds.

Your advantages

  • You can make profits in rising and in falling markets.
  • By blending in a structured product you can improve the risk profile of your portfolio.
  • The minimum investment is relatively small.

Details you should be aware of

  • Between issue date and maturity, price fluctuations may occur, and selling prior to maturity may result in a loss.
  • The respective payment structure only applies to the end of maturity
  • Historic price development is not indicative of future price development

How do structured products as alternative investments react to…

… rising, stable or falling market?
Depending on the structuring of the product, the price development hinges on the underlying instrument. Structured products as alternative investments may benefit from rising, sideways, and falling movements in the markets, which is why you would have to look into the structuring of the specific product.