For more than a decade after the financial crisis, near-zero interest rates shaped the way investors thought about risk and return.
Cheap money supported growth assets, making broad market exposure feel easy to own and encouraging investors to go with the flow of rising markets. Investors looking for income, meanwhile, often had fewer attractive choices.
That world is no more. Higher rates, volatility, technological disruption and energy shocks have all made investors more alert to the path returns take, not only their destination.
Investors still need long-term growth. But many now care more about how returns are generated, how much downside they can tolerate, and which trade-offs they are prepared to accept along the way.
This is the territory of outcome investing, which starts with the specific result an investor is trying to achieve, from downside risk mitigation to enhanced income. Higher rates are improving the economics of many of these strategies, driving renewed interest and new ways to access them.
Structured products prove demand for specific outcomes
Structured products have historically been one of the main ways that retail and wealth investors access outcome-oriented investments. Packaged by banks, they combine a bond-like component with derivatives to create specific payoffs linked to the performance of an underlying asset or index, such as stock markets, currencies, interest rates and commodities.
The most popular payoffs, which are set out in a term sheet prior to investment, often allow investors to target varying degrees of exposure to stock market growth with different levels of protection against losses, or they can help investors to generate a consistent and potentially enhanced level of income depending on underlying performance.
The popularity of structured products shows that investors are willing to trade some simplicity, liquidity or upside potential in exchange for a clearer relationship between risk and return. That is the essential bargain. Rather than taking full market exposure then accepting whatever return path follows, investors in structured products often choose a payoff profile that they choose in advance.
Europe’s structured products market is large. EUSIPA, the European trade body for structured investment products, reported €51 billion of turnover in structured investment and leveraged products in the fourth quarter of 2025, up 31% year on year, and outstanding value in note-based structured products of €495 billion.
These numbers show investors want more than simple market exposure. Many want investments built around specific outcomes.
The trade-offs behind structured products
The trade-off is that the outcome investors actually receive can depend on the fine print. Protection may apply only at maturity or within a defined range. Upside may be capped or early exit difficult. Costs, such as hedging fees and charges levied by issuers, may be embedded in ways that are complex, even arcane.
Liquidity can be the bigger weakness. Structured products aren’t publicly traded, but are issued by a bank. Valuations can be complex, the market for selling before maturity is limited, and prices can be impacted by the issuer’s credit position. In calm markets, this may work well enough if you need to sell. But in stressed markets, prices offered can widen and investors may find it harder to buy or sell.
Then there is issuer risk. Typically, structured notes are unsecured obligations of the issuing bank. This means they are generally not covered by deposit guarantee schemes. Lehman Brothers may feel like ancient history, but its lesson remains current: a payoff is only ever as reliable as the counterparty behind it.
This is one of the reasons investors are increasingly looking more closely at alternative ways to access outcome-oriented strategies.
Outcome mechanics are moving into the ETF wrapper
Active ETFs are now moving certain outcome mechanics into a more transparent wrapper, pursuing objectives including buffered equity exposure and regular enhanced income.
ETFs do not reproduce every structured payoff. Some investors will still need or want the specific contractual features structured products can provide. But ETFs are giving investors another way to access some outcome-oriented strategies in a format that’s easier to trade, compare and monitor.
This shift can expand the market for outcome investing rather than simply rearrange it. Investors who might not buy a structured product, or who may be uncomfortable with the liquidity, pricing and issuer-risk trade-offs, can now access some of the same broad objectives through a familiar fund wrapper that provides greater flexibility should their circumstances change.
Why the ETF wrapper matters
The ETF wrapper changes five things.
The first is liquidity. ETFs can usually be bought or sold on exchange throughout the trading day. They have a primary-market creation and redemption mechanism with secondary-market trading on top, giving investors more routes to enter and exit.
The second is transparency. ETF prices are visible throughout the day. NAVs, holdings and ongoing charges are regularly disclosed, so investors can see what they own. Structured products can be harder to unpack.
The third change is cost. ETF fees are generally shown through a TER or ongoing charges figure, which makes them easier to understand and compare. There are no hidden costs in an ETF – whatever the market price is, it all goes to the investor.
The fourth is access. ETFs can be bought through platforms and savings plans, often in small amounts and, in some markets, from as little as €1 per month. That makes them easier to use in everyday portfolio construction.
The fifth is the structure itself. While structured notes are usually unsecured debt of the issuing bank, ETFs hold assets in a fund structure that is segregated from the balance sheet of the ETF provider, so there is no reliance on the creditworthiness of a single issuer.
Two ways investors are using active ETFs
The practical applications are easiest to see in equity investing.
An investor who wants to stay invested in equities while reducing downside risk might use a structured product with a buffer. Now a buffer or hedged equity ETF can pursue similar objectives within a fund wrapper. In both cases, the buffer isn’t guaranteed and investors will also give up some gains if markets rise sharply.
For equity income, structured products sometimes exchange some upside participation for coupons or conditional income. Equity premium income ETFs pursue similar outcomes through dividends and options premia, often using covered calls.
Again, like structured products, ETFs will give up some participation in rising markets for income.
These outcomes cannot be guaranteed in structured products or in ETFs. However, while structured products offer a payoff profile that’s known in advance, the ETF wrapper makes outcome-oriented strategies more transparent and accessible, and therefore potentially easier to use in portfolios.
Another route to the outcomes investors want
The popularity of structured products shows that many investors want defined outcomes. Now, the rise of active ETFs provides access to outcome-oriented investments that are easier to understand, trade and live with, until those outcomes are achieved.
Structured products will continue to have a role wherever investors want specific contractual payoffs. But for many common objectives, active ETFs offer a cleaner access route that preserves the tradability and transparency that have made ETFs the go-to tool for investors all over the world.