Investment and Insurance FAQ
What are the benefits of structured investment products?
* It is a sound investment tool
A structured product provides the investor with: 1) 100% capital return upon maturity; or 2) potentially high returns (70% payback) on investment. At moderate risk levels, opportunities for profit (potential rate of return is higher than regular deposit rates) are increased through the performance of the underlying basket.
* Standard vs. Customised product offerings
In order to allow for small investment amounts, structured products are usually standardized products that pool together the investments from difference investors to meet a certain issue size. Small amount investors can purchase these products during the issue period.
In addition, structured products can be customized to meet the financial needs of investors and to address their individual needs and preferences such as the make-up of the underlying basket, investment period, regular cash flow and risk appetite etc.
How does an investor choose a suitable structured product?
* Asset ratio: Although structured products are available to retail customers, the investment threshold is still relatively high, ranging from USD 10,000.00 to USD 20,000.00. When investing in such products, the applicant should consider the proportion of his/her total assets that the intended investment amount makes up.
* Substantial investment experience: As the portfolio of a structured product usually includes derivative instruments, it is therefore considered a rather advanced investment tool. It is recommended more for investors with prior investment experience (say, funds, equities, FX etc.).
* Fund liquidity: This should be paired with the short-term, mid-term and long-term plans and usage requirements of the funds. What are the customers’ future plans for the funds? If the funds are needed within the short-term period, it is not advisable then for the funds to be invested on products with an investment period of more than a year; if the customer want to earn a regular dividend income, a long-term investment product that pays a regular dividend will be very suitable.
How will investors keep track of product performance?
For products with an investment period of 6 months and above, the bank will issue regular communication of product price quotes for reference and dividend payments.
What are the risks involved in investing in structured products?
According to the difference in product structure, currency and underlying links, there is exposure to different kinds of investment risks. Common risks include credit risk, FX risk, risk of unforeseen events, national risk, delivery risk, risk of the early buy-back of bonds by issuing bodies, reinvestment risk, risk of changes to the underlying basket, inflation risk, and principal conversion risk etc.
How do I subscribe for your bank’s structured investment products?
We have many different structured products, each with different maturity periods. Please call us at any of our branches or get in touch with your DBS Relationship Manager for further enquiry.