It seems that the bad memories of the Lehman Brother Mini Bond Saga has been gradually forgotten and life has moved on. Structured Deposits (SDs) are taking a shot at the low interest rate environment to lure conservative investors into parting with their money for slightly higher returns than Fixed Deposits before rates potentially start creeping up.

However, do you know what you are actually buying into?

Generally, SDs are capital protected and give a small fixed return with a potentially higher return if certain criteria are met. It may sound good but how is this achieved?

To simplify, here is an example.
90% of the capital is used to buy a double A rated bond that gives a return of 3% pa for 5 years.
10% is used to buy an option on STI index hitting 4,000 points within the 5 years and will pay out 1.5 times ......