Glossary
Underlying Asset
Underlying Asset refers to the financial instrument whose price performance a structured product or certificate tracks. Typical underlying assets include equities, equity indices, commodities, currencies, or interest rates. The performance of the product depends directly on the performance of the underlying asset.
At a glance
01
The underlying asset largely determines the risk-return profile of a structured product.
02
Broadly diversified underlying assets, such as indices, reduce single-security risk, but do not eliminate the risk of loss.
03
Underlying assets can also be illiquid, which may restrict the tradability of the product.
Frequently asked questions
The underlying asset determines how the product performs. A sharp decline can produce significant losses, even if the product incorporates partial protection features. Investors should know and understand the underlying asset before investing. Assessing suitability for an individual situation requires a personal review.
Part of the topic
AMC & Structuring
