Your Portfolio Needs Structured Products: Strategist
Although the global financial crisis was triggered in large part by a meltdown in the structured products space, there is still a place for this instrument in investors' portfolios, said Norman Villamin, head of investment analysis and advice at Citi Global Wealth Management Asia Pacific.
"I think structured products certainly have a place in people's portfolio and I think they are an important way to manage risk for people," Villamin told CNBC.
A year-and-a-half ago, many people used structured products for speculation, but increasingly people are using it for risk management and for position management, he noted.
Many were badly hurt when credit markets froze as they did not fully understand the complexities of minibonds and credit derivatives, but with that experience in hand, Villamin said he is is positive it will give this investment vehicle a leg up.
"I think going forward ... a lot of people (will be) a bit more cautious, a bit more thoughtful about the size of the positions they are taking relative to their overall portfolio and really try to understand better how to use structured products,” he said. “And so to a certain extent, it was a learning experience, it was a good thing for the maturity of the business."