A structured product that allows the holder (investor) to participate in the equity market growth (upside potential) and at the same time secure his/ her capital (through capital protection or principal protection). The principal protection clause is typically valid only if the investment is held till maturity, i.e., early termination renders the product void of such a clause. Principal protected structured products may be more suitable for risk-averse investors looking for market exposure with investment preservation. These products offer full principal protection at maturity with the potential for extra return based on the performance of an underlying asset or basket of assets. Investors, seeking principal protection, may forgo a bit of upside exposure to an underlying asset.

A prime example is principal protected notes and principal protected absolute return notes.