US certificates of deposit losing their shine in testing times for capital protection

With capital protection almost impossible to structure with attractive terms, US investors are being lured away from the safety of certificates of deposit by structured notes that look a little more tempting. By Hannah Collins

US industry participants are optimistic that structured notes will make a significant come-back this year, driven primarily by a low interest-rate environment that is making it very difficult to structure capital-protected (including certificates of deposit (CD)-based) products with attractive returns.

In a higher-rate environment, we would not be discussing the switch out of CDs to non-government guaranteed products, says Mike Clark, New York-based managing director and head of retail