A structured product that is not secured by a collateral asset. Such products are not asset backed, and therefore, in the event of bankruptcy by an issuer, investors/ holders may lose their entire investment. Non-collateralized structured products offer investors the potential to earn “additional” returns that are linked to the performance of an index or basket of securities, but without involving any collateral to which the investors (lenders of funds) can resort in the case of default by the issuer. This corresponds to the risk-return tradeoff as the lack of collateral increases the risks associated with such products.
November 24, 2024
