WHAT ARE STRUCTURED PRODUCTS? 
ANSWERING COMMON INVESTOR QUESTIONS

Structured products, also known as Market-Linked Products, have evolved significantly over the past decade. Once viewed as tools reserved for institutional or ultra‑wealthy investors, today’s structured products are more transparent, customizable, and accessible than ever before.

Designed to help investors manage risk, generate income, and navigate uncertain markets, these investments combine familiar assets—such as major stock market indexes—with clearly defined features and outcomes. As a result, structured products have seen rapid growth: according to SRP.com (Structured Retail Products) industry issuance increased from approximately $102 billion in 2023 to an estimated $165 billion in 2025, reflecting rising demand from investors seeking alternatives to traditional stocks and bonds.

If you’ve been curious but cautious, you’re not alone. Below, we address five of the most common questions investors have about structured products.

1. Are structured products too risky?

Not necessarily. Many structured products, while often misunderstood as speculative investments, are designed specifically to manage risk, not increase it, depending on the structure.

At their core, structured products link returns to the performance of a well‑known underlying asset, such as the S&P 500®, Nasdaq‑100®, or Russell 2000®. What makes them different from investing directly in those markets is that they can include built‑in downside protection in exchange for potentially capped upside or the requirement to hold for an increased tenure.

Depending on the structure, a product may:

• Protect 100% of your principal if held to maturity¹

• Buffer a predefined amount of market losses at maturity¹

• Limit losses unless the market falls beyond a stated threshold¹

   

For more conservative investors, it’s possible to invest in market-linked CDs that offer 100% principal protection with FDIC insurance at maturity, up to applicable limits. Depending on your risk tolerance, you can also select principal-protected notes that offer full principal back at maturity, or market-linked notes with varying levels of protection, subject to the credit risk of the issuer.¹

In short, the risk level is not one‑size‑fits‑all and you can choose how much market exposure and protection you want.

2. Are structured products only for wealthy investors?

Not anymore. While structured products were once primarily used by institutional and high‑net‑worth investors, many offerings today are available with minimum investments as low as $1,000. This makes the same types of outcome‑based strategies accessible to a much broader audience.

Importantly, structured products are designed with clearly defined terms, allowing investors to understand what they’re buying before they invest.

3. Are structured products complicated?

Structured products are considered complex investments so it is important to know that they are built around clearly defined features that investors can understand upfront:

• Maturity date: When the investment ends and returns are calculated

• Downside protection: How much loss protection applies at maturity

• Upside participation: How much of the market’s gains you can earn

• Income features: Fixed or contingent coupon payments. Contingent coupon payments are variable interest payments on structured products that are only paid if the underlying asset meets specific performance conditions.

• Market outlook: Whether the product benefits from rising, flat, or modestly declining markets

To help advisors and their clients fully understand the benefits and potential risks of structured investments, InspereX has created a library of award-winning, FINRA-reviewed educational materials. You can access this library on the InspereX website: https://www.insperex.com/market-linked-products/client-friendly-literature/

4. Are structured products expensive?

Like most investment products, structured products include costs that investors should understand upfront. These may reflect:

• Structuring and development expenses

• Advisor compensation

• Issuer costs tied to creating the investment payoff

Unlike traditional investments, however, these costs are typically embedded in the product structure, rather than charged as ongoing management fees or brokerage commissions.

Structured products are designed as buy‑and‑hold investments, meaning their value is intended to be realized at maturity. When held until that date, market‑linked CDs and principal‑protected notes return the original investment amount (subject to issuer credit risk), along with any earned income or performance‑based return.

Understanding the terms upfront is critical—and investors should always review offering documents carefully.

5. Is there a structured product that fits my needs?

One of the key advantages of structured products is their flexibility. They blend elements of fixed income and equity exposure to create solutions tailored to different investor objectives, such as:

• Generating income in sideways markets

• Reducing downside risk during volatility

• Gaining controlled exposure to equity upside

• Preserving capital while seeking modest growth

Because structured products can be designed with varying levels of protection, income, and participation, they allow investors to fine‑tune risk and reward far more precisely than traditional investments.

This adaptability means there is often a structure that aligns with your goals—whether you prioritize income, capital preservation, growth, or balance across all three.

Footnotes:

¹ Any return of principal, as well as interest and gains generated, are subject to the credit risk of the issuer and terms of the offering documents, which could include participation rates, interim caps, and various risks. Dividends paid on the underlying asset are not passed through to the Market-Linked Product. There is no guarantee that a Market-Linked Product will generate a positive return. Any applicable downside protection will be realized only at maturity, which may range up to 10 years. For certain Market-Linked Notes, return at maturity could be less than the original amount invested. Regarding Market-Linked CDs, the Federal Deposit Insurance Corporation (FDIC) insures principal amounts up to applicable limits in the event the issuer becomes insolvent.