Structured Products

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Tracker Certificates

A Tracker certificate has an identical payoff profile as the underlying asset upon which it is based. As such, there is no optionality involved in this product category.

A tracker has neither cap nor protection and its risk is identical to the underlying asset(s) it tracks, if one excludes the issuer risk. The "raison d'être" of trackers is their ability to allow investments otherwise not possible or not economically feasible. For instance, if you want to track an index, either you buy all its components individually, or you buy a future on this index. The latter may not be possible because no future exists, and the former may not be possible because of minimum size requirements. Imagine that you want to be exposed to the ABC Index, an imaginary index that encompasses 50 wind energy stocks worldwide for EUR 50'000. There's no future, (or maybe there's a future, but 1 future already represents EUR 100'000) and you have no wish to purchase 50 stocks individually for EUR 1'000 each. There may even be one or two stocks worth more than EUR 1'000 individually, so it wouldn't work in any case. Another example would be commodities. If you wanted to invest in commodities, you couldn't do so very well by purchasing gold, copper, wheat or aluminum physically. 

One of the best way to solve those problems are tracker certificates. Exchange traded funds may also be a good alternative. An index certificate on the hypothetical ABC index would track the said index on a 1:1 basis. With a single instrument, the 50 wind energy stocks are represented with their appropriate weighting in your portfolio. The same would be the case for a commodity index certificate. 

Tracker certificates are one of the few structured products that may have no maturity (often called open-ended certificates).

Payoff features

Tracker certificates are constructed using a zero-strike call on the underlying asset. If the certificate tracks an index on which a liquid future is available, the issuer often buys the future instead of a zero-strike call. The issuer may even physically hold the underlying individual shares if the certificate is based on a basket of shares.

  • Do invest in a tracker certificate if other investment solutions (like futures, ETFs or holding individual assets) are not practical or don't seem possible. 

  • Do invest in commodities by means of certificates, by selecting a commodity index whose construction rules are adapted to the current market (for instance, consider the contango or backwardation of the market).

  • Don't buy a tracker if a cheaper or more practical instrument exists. An ETF (exchange traded fund) may be available and have a higher liquidity or lower cost. On the other hand, certain total return tracker certificates may be cheaper (and provide a better performance on an after-tax basis in some jurisdictions) than ETFs.

Main influence factors
  • For stock or stock index trackers: dividend yields, albeit their overall influence remains limited. Unless the tracker certificate is based on a total return underlying, dividends are not paid out to the holder of a certificate.

Classical variants
  • Quanto Certificates; when a certificate's constituents are labeled in different currencies, it is often better to have the currency risk excluded from the whole investment directly in the certificate. 


Quite often, stock basket or stock index certificates are issued on an ex-dividend basis. An index certificate on the Eurostoxx50® is a common example. The index is a price index, and dividends are not considered in the index. The expected (future) dividends are discounted until the product's maturity and the certificate should be issued at a discount to par. If that's not the case, then either the basket or index as a whole does not pay any dividends over the lifetime of the product, or the expected dividends are being kept by the issuer. Whatever the case, if you expect rising dividends, a tracker will probably not reflect the increase in its price (unless the index is a total return index), because the dividends have been fixed by the issuer at the inception of the product.