Counterparty Risk

Do you understand the risks behind Structured Product Investing?

The last few months have seen a return of investor confidence, but the issue of counterparty risk is changing the structured products landscape. New types of products for retail investors are emerging, such as cash-collateralised and gilt backed products. Structured fund offerings are also increasingly being developed for retail, which help to mitigate exposure to single counterparties.

However there are still concerns surrounding this issue. Can investors and IFAs rely on credit ratings? Can they look at CDS levels to judge counterparty risk and how can this be translated for retail investors? Can retail investors really rely on ‘100% capital protected' products to return capital? If investors start relying on only the highest rated banks, is there the threat of concentration risk? Does there need to be more regulation surrounding structured products, following criticism from the IMA?

This debate sees James Chu of Blue Sky Asset Management, Gary Dale of Investec Capital Markets and Adrian Neave of Keydata Investment Services discuss the importance of credit ratings and counterparty risk.

To listen to this debate, please click here

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