Structuring with caution

Extracting impressive returns from UK products is proving difficult after interest rates were cut to 1%. But provider Zurich says investors are ultimately concerned with return of capital rather than a desire for capital-at-risk products that might provide enhanced returns, and simplicity is therefore key. By Emma Dunkley

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When financial markets are volatile, structured products offering capital protection rise in popularity as retail investors become increasingly cautious. At the end of 2008, the UK market was worth around £9 billion, compared with £7.5 billion at the end of 2007. The increase in issuance in the UK is widely expected to continue throughout this year, as the economic downturn is causing a shift in investor sentiment. "In this market, return of capital is more important than return on capital,"

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