Risk diversification

One of the interesting developments in the retail structured product market over the past two years has been the growth in products that seek to mitigate counterparty risk through use of collateral. Buying a structured investment product issued by a single counterparty is equivalent to buying a bond from that issuer. If the issuer goes to the wall, the investor could lose the total value of their investment. Collateralised structures give the adviser the tools both to potentially counter market risk, through using capital protection, and specific risk via counterparty diversification....