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Grow Your Investment Toolkit with Structured Products

Scott Newbould · Posted on: July 25th 2025 · read

One lesser-known investment type that can form part of a portfolio is an arrangement called a Structured Product - investment products that combine different financial elements to create a custom solution for specific goals you may have.

These types of investment can work as a diversifier to a more traditional investment portfolio which would include stocks and shares or bonds and have the potential to limit day-to-day volatility seen within investment markets, whilst offering returns in excess of traditional bank accounts. (although these types of investment should not be considered as being without risk).

What are structured products?

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A structured product usually mixes a safer element (like a bond) with something more adventurous (like a stock option). The result is an investment that can be tailored to your needs, whether you want to limit risk, aim for higher returns, or both.

There are two different types of Structured Product:

Deposit-based plans
Investment-based plans

Both differ in returns available, risk to your initial capital, and how any returns are taxed.

For example, deposit based structured products are designed to protect your original investment (up to FSCS limits) whilst still giving you a chance to earn returns in excess of cash deposits and inflation or the ability to generate income.

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With these types of investment, you will typically have a set start and end date, with some products having the ability to mature early should certain investment market criteria be met, known as ‘kick out points’. You will also know the potential return from the outset and depending on the features added to a structured product, this will dictate the level of return that can be achieved. The level of return cannot be increased should the underlying index being used as a benchmark outperform, so the level of return achieved will be outlined within the initial terms before the product starts.

Whilst investment based structured products are designed to give you the ability to generate a higher level of return but aim to do so without you seeing the day-to-day volatility of investment markets.

With investment-based arrangements, however, there is the potential that you could lose some or all of your initial capital, depending on the performance of the underlying investment index which is being followed.

Why use structured products?

In today’s market, interest rates are higher than they’ve been in years, and many investors are looking for smarter ways to grow their money without seeing the value of their funds move on a daily basis.

Structured products can help by offering:

Custom risk and return

You can choose how much risk you’re comfortable taking (whether this is a deposit or investment-based plan) and add certain features to help reduce the level of volatility seen within the investment, as well as increasing the potential for a return on top of your initial investment to be achieved.

Income opportunities

Some products pay regular interest or income to help boost other income you may already receive.

Market access with protection

You can benefit from market growth whilst having the potential to limit losses, depending on the product selected and the features it has.

Types of structured products

A few common types you might come across:

Income-focused products: These aim to pay you regular income, often more than traditional savings or bonds.
Capital-protected products: These are designed to return your original investment at the end, even if the underlying index being followed doesn’t perform well.
Growth products: These offer the chance for higher returns if certain market conditions are met but may come with more risk and the potential for loss to the initial investment.

How structured products fit into a portfolio

Structured products can be a great way to balance your investments. For example, if you already have stocks and bonds, adding a structured product could help smooth out the ups and downs seen at volatile times.

We would not suggest that these types of arrangement are used solely on their own as there are certain risks that need to be considered, however, they can provide useful diversification within a complete investment portfolio.

Potential risks

As with all investments, there are risks that need to be considered and these types of arrangement are more complex than more traditional stocks and shares or bond investments, with there being the potential to lose initial capital depending on the performance of the underlying index being used.

We would recommend always speaking to an adviser before investing in these types of investment, to ensure that you are fully aware of the risks that will apply and how this can affect your investment and financial position.

Final thoughts

"Structured products offer a different way to invest and can provide a level of diversification from more traditional investment portfolios. Whether you're looking for steady income, some protection from market volatility, or a way to grow your money in excess of cash deposits and inflation, structured products could be a useful part of your investment toolkit."

Scott Newbould, Associate

How we can help you

Should you wish to explore structured products in more detail, to discuss other investment and financial planning needs, please contact a member of the MHA Wealth team for further guidance.

Risk Warnings

Key Risks: Capital at risk. Past performance is not a guide to future performance. The value of an investment and the income generated from it can go down as well as up, and is not guaranteed, therefore you may not get back the amount originally invested and you may not be protected if something goes wrong.

Investment markets and conditions can change rapidly. Investments should always be considered long-term.

Structured products often have complicated features that can make it difficult to understand the return you are likely to get.
Structured products are linked to the performance of an index. If the index falls significantly by the end of the term, you could incur a financial loss and there is no facility to manage the investment to reduce exposure to falling markets.
If you need to access your capital before the maturity date, you may receive less than your original investment and could also incur early redemption penalties.

Specific to structured investments:

Investments will be subject to counterparty risk. The level of this type of risk will be dependent on the provider of the structured investment rather than the underlying investments.
You may not be eligible for protection under the Financial Services Compensation Scheme.

Specific to structured deposits:

Structured deposits differ from standard deposit accounts. The level of interest payable is dependent on the performance of an underlying asset - often a stock market index. Depending on the performance of the relevant index, you may receive no interest payments across the whole term of the plan.

Important information

MHA Wealth is the trading name of MHA Wealth Ltd, a company registered in England (1916615) with registered office at The Pinnacle, 150 Midsummer Boulevard, Milton Keynes, MK9 1LZ. MHA Wealth is authorised and regulated by the Financial Conduct Authority (FCA) with registered number 143715 and is a member of the London Stock Exchange. MHA Wealth is a member of the MHA group. Further information on the MHA group can be found at https://www.mha.co.uk/details-of-mha-uk-entities.

This is a marketing communication for general information only, and is not intended to be individual investment advice, a recommendation, tax, or legal advice. The views expressed in this article are those of MHA Wealth or its staff and should not be considered as advice or a recommendation to buy, sell or hold a particular investment or product. In particular, the information provided will not address your personal circumstances, objectives, and attitude towards risk.

This information represents our understanding at the time of publication of current law and HM Revenue & Customs practice. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change.

You are recommended to seek professional regulated advice before taking any action.