By Teh Shi Ning

For the investing newbie, structured products is a term still tainted by the memory of retail investors losing hundreds of millions invested in products linked to the bankrupted Lehman Brothers when the 2008 financial crisis erupted. Yet, it may be worth exploring more before you dismiss these as a class of investments only the sophisticated, well-heeled investor can touch.

For those willing to do their homework and understand each structured product before investing, these 'customer-centric products' could in fact be a good option to add specific characteristics to a portfolio.

After all, they are designed - 'structured' - with specific objectives in mind and can thus 'create value for investors by offering customised payoffs and risk levels that are different from other basic financial instruments such as normal bonds and stocks', says Nanyang Business School associate professor of finance Low Buen Sin.

Still, 'the risks of these products are high and they are riskier in volatile markets', so the word of caution from Ang Ser-Keng, senior lecturer of finance at SMU's Lee Kong Chian School of Business, is that 'young investors should not undertake such investments unless they are experienced or if this investment accounts for a very small part of their portfolio'.

With that in mind, let's go over some of the basics and some things to consider before investing in a structured product.