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

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,"