Unlike trackers, they do not simply replicate the performance of their benchmark. They have variable levels of exposure that are adjusted systematically in the light of market developments and optimised on the basis of its expectations for market direction and volatility.

It all depends on the type of structured fund you choose.

• Some structured funds offer investors partial protection of their capital. The product is managed using the so-called portfolio insurance method, a financial technique that cushions the effect of a decline in the benchmark index⁽¹⁾. It is therefore potentially less risky over the long term than a tracker for exactly the same period.
• Other structured funds use the leveraged technique which consists in taking risk exposure for an amount that exceeds the amount of capital invested. Because of the leverage, investors may lose far more than a tracker investor if the index declines. That is why the product is intended chiefly for active, experienced investors that can cope with the risks associated with leverage  and that want to boost their portfolio performance by taking on more risk.

             (1) Except when exposure to the index is at its maximum.

The cushion is the portion of the structured fund‘s assets that can be put at risk without compromising the capital protection level or the floor.

The multiplier is the coefficient applied to the cushion in order to determine the structured fund’s exposure to the benchmark index. Traditional portfolio insurance – otherwise known as Constant Proportion Portfolio Insurance (CPPI) or ‘cushion management’ – uses a fixed multiplier.

Leverage consists in taking risk exposure for an amount that exceeds the amount of capital invested. In most cases, leverage is obtained by borrowing r by using derivative products such as options or futures contracts.

Structured funds are traded just like shares listed on Euronext Paris. To buy or sell a structured fund, you simply place an order with your usual financial intermediary, indicating the product name or code (ISIN code or symbol), the number of units. Your financial intermediary will then execute your order in real time and bill you in the usual way.