Getting under the bonnet of collateralisation

The evolution of structured UCITS has seen collateralised investments come to the fore. Morgan Stanley's Sophie Barnett looks at how such plans have been adapted for the retail market.

Structured products have often been seen as a way to mitigate market risk within a portfolio, either by adding protection, or by increasing diversification via exposure to non-traditional asset classes. But many are put off by the belief that structured products inherently contain high levels of counterparty risk that cannot be mitigated or hedged, especially since Lehman, which brought the consequences of counterparty risk exposure to the fore. However, the structured product market has evolved significantly in recent years and providers have developed lower counterparty risk solutio...