From Mr Andrew Halford.

Sir, John Kay’s article “ Bonds designed to leave savers bemused” (November 17) rather misses the point regarding structured products. These are generally designed to help to protect investors’ capital while providing scope for strong returns either relative to cash or to equity markets.

The “kick-out bond” Prof Kay refers to is a good example of this, and takes advantage of a particularly favourable pricing environment for such bonds. Charges can be high, but these are levied by distributors, not investment banks, whose take tends to be relatively modest. High charges for distribution are not exclusive to structured products, and can apply to almost any form of retail investment product.

Given that, in Prof Kay’s words, “the most probable outcome is that the bonds yield a high fixed return” with “a small risk of no return at all and a smaller risk of significant loss of capital”, I think that many equity investors, bruised by events in the markets over the past few years, might find such a proposition rather compelling.

Andrew Halford,

Head of Structured Products,

Kleinwort Benson Bank,

London EC2, UK

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