A Guaranteed-Return Structured Product as an Investment Risk-Hedging Instrument in Pension Savings Plans

This study proposes a structured product (SP) for hedging defined contribution pension fund members against capital market risk. Using Monte Carlo simulations on three different guaranteed returns to test the investment strategy of SP balanced portfolio, we measure their performance across wide variety and risk scenarios. The results show that guarantees minimal return savings portfolio offers higher at lower risk, compared with portfolio. We conclude may become popular among members, potentially leading improved management, greater competition, innovations schemes.