Structured products combine the risk/return characteristics of different financial instruments.

There are usually two elements to a structured investment:

1. An element of capital protection, usually a bond product.  
2. An 'at risk' element' (called an alpha generator) which provides the high performance potential. This can be any financial instrument - a stock, an index, currencies or commodities

Basically, the bond element sets the time horizon and the level of capital protection offered by the product. The alpha generator provides the enhanced performance potential.

A lower risk, 'defensive' structured product will allocate the majority of the investor's capital to the bond element. A higher risk, 'aggressive' product will use derivatives to increase the extent of alpha exposure.

The endless combinations of fixed income instruments and alpha generators mean that the structured product market is highly diverse. However, most products are a variation on a single theme, the zero-coupon strategy.