Frankfurt The current market environment is anything but easy. Bonds will hardly offer any returns for the foreseeable future, and investors have already had to endure high fluctuations in stocks this year.
“Certificates are a good addition to a diversified portfolio in order to take advantage of opportunities in the capital market and limit risks,” says Markus Reitmeier, Head of Capital Markets Private Customers at DZ Bank. “Unfortunately, some private investors still find it difficult to take advantage of the opportunities offered by these products.”
Polarize certificates. Some see it as an optimal way to achieve a decent return in every market phase. Others see it as a game of chance the banks want to make money with.
In principle, certificates are securities and not bets. But one thing is clear: “Structured products require explanation. There is no single financial product that will prove itself in every market situation. But there are suitable products for every situation, ”says Lars Brandau, Managing Director of the German Derivatives Association (DDV).
Certificates are issued by an issuer, usually a bank. Investors can purchase them there or on the stock exchange. The holder of the certificate participates in the performance of an underlying asset. This can be a share, an index, a commodity or a currency. Private investors can easily invest in a wide variety of underlyings.
One of the advantages of certificates is that investors can bet on rising, falling or sideways prices, depending on the type of certificate. Complex investment strategies can be implemented, and with relatively small amounts.
But there are also disadvantages: The performance is usually difficult to understand. And often the chances of winning are limited. Since certificates are legally bearer bonds, the investor does not receive any dividends and has no shareholder rights such as voting rights at the general meeting. In view of the large number of products with the most varied of names and designs, it remains a challenge to fully understand them.
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