Saying hello to hedge funds

The financial crisis has changed investor attitudes towards risk and reward, particularly for anyone invested in the hedge fund industry. It has also boosted the attractiveness of structured products to hedge funds, which are using the products like never before. Philip Niles explains this newfound popularity

For many years, derivatives-based structured products have promised and delivered on the opportunity to earn higher rates of return than that available from traditional fixed-rate deposits. At the same time, these investments have generally featured capital protection, so that most or all of an investor's initial investment is guaranteed to be returned. With such simple yet compelling attractions, it is easy to see why investors have turned to the products.

But while these safety features may