Harnessing the balance between risk and risklessness

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Constant proportion portfolio insurance is an actively managed solution that uses an allocation of riskless and risky assets to protect the initial investment at maturity

Simpler forms of constant proportion portfolio insurance (CPPI) have been on the market for a few years, but recent developments have fuelled a rebirth of this product. Given the number of recent offerings in the UK market, it seems likely that CPPI will become a dominant feature of structured retail products for years to come. CPPI is an actively managed portfolio solution that uses a dynamic allocation between riskless assets such as cash or bonds and risky assets such as equities or mutual funds. CPPI gives exposure to a desired underlying instrument and the initial investment can be ...