Capped Returns

Capped returns refer to a financial arrangement where the potential return on an investment is subject to a maximum limit. This means that no matter how well the underlying investment performs, the investor will not receive more than the predetermined maximum return.

This cap is often seen in structured products or certain options strategies, where the investor trades unlimited upside potential for reduced risk or enhanced yield.

Capped returns can also be attractive to conservative investors who prioritise capital protection over high returns. These caps are often part of structured notes or other investment products that offer a combination of fixed income and equity exposure.