A structured product that consists of an equity component (for upside potential) and a derivative component (as protection or insurance against downside price movement). The return/ loss is determined by the performance of a stock or a basket of stocks. Due to the volatile nature of equity investments, equity structured products are often associated with the most aggressive risk/ return profile vis-à-vis other structured products.
There is a wide variety of equity structured products including: simple access products (e.g., equity-linked notes, discount certificates, bonus certificates, trackers and synthetics), capital guaranteed notes (also known as principal protected notes/ PPNs), reverse convertibles, protected bull notes, protected cliquet notes, multi-barrier protected notes, leveraged bull notes, best-of and worst-of outperformance structures, and so on.
