Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No.

1115-9146

10

STRUCTURED PRODUCTS AND ITS INFLUENCE

ON RETAIL INVESTORS’IN INDIAN MARKET

Dr. MURUGESAN R., Director and Professor,

Sri Ganesh School of Business Management, Tamilnadu, India
Dr. THAMOTHARAN A., Assistant Professor, School of Management Studies,
Reva University, Bangalore, Karnataka, India

Dr. RAJKUMAR T., Principal and Professor,

Sree Chaitanya PG College (MBA Programme), Hyderabad, Telangana, India.
Structured products are the new concept emerged in secondary market, SEBI hasissued more
specified guidelines on structured products and taken certain efforts inorder to instruct the
investors about the structured productsalso to protect the interest of the investors.Structured
products are rightly posi�oned for the urbaneinvestor as the nuances involved are many and
ABSTRACT

investors need to give it adequate thought and analyzethe details before inves�ng, the recently
issued guidelines will help the investors understand the products be�er in this connec�on this
paper is focused to answer for is structure product popular among investors? If it is so what kind
of impact it made among investor? To know these 14 statements are prepared and asked opinion
from investor and analyzed the same using sta�s�cal tools such as factor, cluster and correla�on
analysis.
Key Words: Structured Products, Impact, Opinion

Introduc�on not clear about the structured products and

Structured product may call as fixed deposit their benefits.
which protects the principal investment and
structured product givesinvestors’to access Statement of the Problems
the equity while protec�ng the capital, unlike Investors a�tude towards their savings have
the conven�onal op�ons.Structured products being changed from savings to investment
are listed on exchanges but are not very nowadays as well as there are flinty of
liquid; In Indian context, most of the people investment opportuni�es available in Indian
are not aware of structured products and its market. Structured products are the new
benefits.The structure product can call concept in the market where the investors
market linked product, it is a pre-planned need to understand the complexi�es of the
investment strategy based on deriva�ves structured products and how well they
product op�ons it can be any financial and perform and how to make profits by inves�ng
non-financial investments and to a lesser in such products.Investors should have
extent, swaps.Since the structured products knowledge about the mechanism of
are the new concept emerged in secondary structured products in order to make their
market, SEBI hasissued more specified investment decision more effec�ve. However,
guidelines on these products and taken this revise focuses on evaluate the contact of
certain ini�a�ves inorder to educate the structured product on the retail shareholder.
investors about the productsalso to protect
the interest of the investors.SEBI is making
efforts in changing risk percep�on on the
structured products but s�ll the investors are

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Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

Objec�ves of the Study Data inves�ga�on and Interpreta�on

Collected data is examine using the sta�s�cal
 To study the rela�onship between tools namely factor study, cluster study and
socio-economic profile and the impact of correla�on study for assess the force of
structured products structured product on investors’.
 To assess the impact of structured products
on retail investors Factor Analysis
Factor analysis is used to recognize and
Research Methodology Sampling Procedure iden�fy the underlying scope (factors) in the
original variables. Here 14 declara�ons are
As far as objec�ves of the study are famous to know the force of structured
concerned, the study aims to analyse and products on retail investor and the variables
explain the socio-economic profile of the are confirmed in the form of report to collect
respondents’ structured products and its opinion from investors’. They were asked to
force on investors. Hence, the research give their view for all the 14 statements in the
design prac�cal for this learns is inves�ga�ve Likert’s five point scale with exchange op�ons
and expressive in nature. Both primary and such as highly dissa�sfied, dissa�sfied,
secondary data were used in this study. The neither sa�sfied nor dissa�sfied, sa�sfied,
main data was composed from prepared and highly sa�sfied. Ini�ally, the correla�on
product investors, using a well prepared among these variables is calculated.
interview agenda. The sample respondents
have been chosen by adop�ng purposive
sampling method. The sample size is 120
respondents were chosen from Bangalore.

Table-1 KMO and Bartle�'s Test

Kaiser-Meyer-Olkin compute of Sampling
.735
Adequacy
Approx. Chi-Square 1067.889
Bartle�'s Test of Df 91
Sphericity
Sig. .000
Source: Computa�on from Primary Data

KMO and Bartle�’s Test

The value of examina�on sta�s�cs is given above as 0.735 which means the issue analysis for the
iden�fied variables is found to be appropriate to the data. The value of KMO compute of sampling
adequacy is 0.735. The important value of Bartle� test is 0.000. Hence, there exists important
consequence Associa�on among the variables. The measure of KMO test and value of Bartle� test
indicate that the present data is useful for issue analysis.

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 Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

Table-2 Grouping of Factors

Factors Statements Scores

Structured products are not easily liquidated and hence there is no secondary
.808
market to sell

Unless the capital is held �ll maturity the capital protec�on cannot be enjoyed
.804
by investors
Complicated Process

Structured products are quite expensive to be purchased by retail investors .653

Transparency of fees can be a problem with some of the structured products .653

Investors consider principle protec�on very a�rac�ve feature and hence their
.613
investment decision to invest in structured products is strongly affected by it

Investors are ge�ng a�racted to invest in structured products because of

.578
capital protec�on

Investors should have sufficient knowledge about structured products in order

.823
to make investment decision

Structured products provides investors easy access to deriva�ves .773

Awareness

Structured products are used as a way of por�olio diversifica�on by high net

.772
worth investors

Structured products enable the investors to diversify their investment por�olio .610

The advantage of using structured products as capital protec�on is off set with

.773
various other risks
Capital Protec�on

They are used as an alterna�ve to direct investment as a measure to mi�gate

.770
risk exposure of por�olio

There is growing propensity for structured products in recent years by investors .691

They are considered by investors as less risky investments because of their

.545
principle protec�on

Source: Computa�on from Primary Data

Table 2 reveals the factor loadings (co-efficient) which point to how much weight is assign to
each factor. Factor’s with large co-efficient for the variable are closely related to that variable. Thus,
the 14 variables in the data are summary into three issue models and each factor is recognized with
the consequent variables as given below.

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Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

Table-3 Impact on of Structured Products on Retail Investors with Rank and Score
S. NO Statements Score Rank

Investors should have sufficient knowledge about structured products in I

1 order to make investment decision .823

Structured products are not easily liquidated and hence there is nosecondary
2 .808 II
market to sell

Unless the capital is held �ll maturity the capital protec�on cannot be
3 .804 III
enjoyed by investors

4 Structured products provides investors easy access to deriva�ves .773 IV

The advantage of using structured products as capital protec�on is off set

5 .773 IV
with various other risks

Structured products are used as a way of por�olio diversifica�on by high net

6 .772 V
worth investors

They are used as an alterna�ve to direct investment as a measure to mi�gate

7 .770 VI
risk exposure of por�olio

There is growing propensity for structured products in recent years by

8 .691 VII
investors

9 Structured products are quite expensive to be purchased by retail investors .653 VIII

10 Transparency of fees can be a problem with some of the structured products .653 VIII

Investors consider principle protec�on very a�rac�ve feature and hence

11 their investment decision to invest in structured products is stronglyaffected .613 IX
by it

Structured products enable the investors to diversify their investment

12 .610 X
por�olio

Investors are ge�ng a�racted to invest in structured products because of XI

13 capital protec�on .578

14 Structured product is less risky investments and it protect principle amount .545 XII
Source: Computa�on from Primary Data

Table 3 describes the most as well as the least contact of structured products on retail investors. Based
on the scoring “investor should have sufficient knowledge about structured products in order to make
asset choice” stands on 1st Rank and the statement Structured product is less risky investments and it
protect principle amount stands on the 14th rank.

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Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

Cluster Analysis for Impact of Structured product

The impact of structured products on Retail Investors can be classified in three categories based on
choice criteria using the cluster analysis. They are classified into three segments because the
difference between the co-efficient is significant only on three cases on the hierarchical cluster. For the
purpose of classifica�on of investors’ sa�sfac�on, K- means cluster is used.

Table-4 Final Cluster

Cluster
Factors
1 2 3
Complicated Process 3.34 1.86 3.95
Awareness 3.34 2.21 4.16
Por�olio Diversifica�on 3.43 2.36 4.12
Average Score 3.37 2.14 4.08
Rank II III I
Source: Computa�on from Primary Data)

The final cluster centers’ table 4shows the mean values for the three clusters which reflect the
a�ributes of each cluster. The average score of the third cluster is 4.08 with first rank, first cluster is
3.37 with second rank and second cluster is 2.14 with third rank. This means that the third cluster
structured products have created high level of impact on investors, first cluster structured products
have created medium level of impact on investors and second cluster structured products have
created low level of impact on investors.

Table-5 Anova
Cluster Error
Factors Mean Mean F Sig.
Df Df
Square Square
Complicated Process 16.270 2 .185 117 87.830 .000
Awareness 17.801 2 .226 117 78.835 .000
Capital protec�on 13.818 2 .234 117 59.087 .000
Source: Computa�on from Primary Data

The significant value for the above three factors is 0.000. This means that the above three factors have
significant contribu�on on dividing investors’ into three segments namely high level impact, medium
level impact and low level impact based on prime criteria.
Table-6 Number of Cases in each cluster
Cluster Respondents Percentage Rank

Cluster 1 154.4 38.33 II

Cluster 2 23.5 5.833 III

Cluster 3 224.1 55.83 I

Total 402 100

Source: Computa�on from Primary Data

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 Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

The table 6 reveals that out of the 402 respondents, 224.1 (55.83%) have high level of impact on
structured product, 154 (38.33%) have medium level of impact on structured productand 23.5(5.83%)
have low level of impact on structured product. It is important to note that 55.83% of the respondents
have high level of impact on structured product.

Correla�on analysis
The Pearson correla�on analysis is applied between Structured Products and Investors
Socio-economic Profile. The details given below

Table 7
Correla�on between Structured Products and Investors Socio-economic Profile
Pearson
Sl.
Variables Correla�on Sig. RESULT
No
Value
1 Gender -.040 .664 Not Significant
2 Marital Status -.113 .795 Not Significant
3 Educa�onal Qualifica�on .024 .795 Not Significant
4 Occupa�on .477** .000 Significant
Comfort level in inves�ng in
5 .202* .027 Significant
Structured products
6 Frequency of Trading .004 .964 Not Significant
7 Reason for Inves�ng -.180* .049 Significant
8 Investment Objec�ve -.004 .967 Not Significant
(Source: Primary Data)**Significant at 5%, *Significant at 1%

It is observed from above table thatoccupa�ons, comfort level in inves�ng in structured products are posi�vely
correla�ng and has significant associa�onwith impact on retail investment. The reason for inves�ng and
investment objec�veare nega�vely correla�ng and has significant associa�on with impact on retail
investment and Gender, Marital Status, educa�onal qualifica�on, frequency of trading and investment
objec�ve are not correla�ng with impact on impact on retail investment.

Sugges�ons
1. As far as structured products and its impact on retail investors is concerned out of the 14 statements, the
statement namely “Investors should have sufficient knowledge about structured products in order to make
investment decision” has more impact among retail investors’ in Indian market and this statement is placed
first. In this connec�on, the regula�ng body should seriously view this statement and enhance their
knowledge about structured products investment through effec�ve mode of program. The regula�ng body
should also consider the research finding that only 55.83% of the respondents have agreed that structured
product made impact on their investment. [As per the Factor Analysis and Cluster Analysis]
2. Structured product created more impact on retail investors, the reason is due to complicated process, the
level of awareness and investment diversifica�on, 55.83% has high level of impact on retail investors, 38.33%
has medium level impact and only 5.83% has medium level impact. The respondents have had agreed that the
above men�oned factors were leads to high impact on retail investors. The regula�ng body has to give more
importance for those factors which create impact among retail investors. [As per the Factor and Cluster
Analyses]

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Interna�onal Journal of Business Review And Entrepreneurship |Volume-3 | Issue-1 | March - 2022 |ISSN No. 1115-9146

Conclusion
Structured products very new concept in Indian market, the majority of investors has inves�ng
without knowing the market and structured product. The adaptable power may take essen�al events
to disseminate the informa�on regarding structure products, facial appearance and opera�ons of
structured product in Indian market as well as merits and demerits of structured product investment
among the investors in general and age, marital status, occupa�on, inves�ng in structured products
and percentage of amount invested in par�cular. Further, the regula�ng body should evolve a suitable
investors’ educa�on programme on structure product which will help the exis�ng investors to
con�nue their investments.

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