Staying invested without taking all the risk

30 March 2026

The wrong question

Most portfolio conversations start from allocation: how much in equities, how much in bonds, what's the split? That framing has its uses, but it can obscure the more important question: what kind of equity risk are clients actually carrying and is that the risk they need?

For clients approaching or already in retirement, total equity exposure tells you relatively little. What matters more is the shape of that exposure, the size of the drawdown they'd face in a bad year, and whether the portfolio can recover within their time horizon.

Those two things are not the same. And managing them requires thinking beyond the headline allocation.

The asymmetry problem

Markets have remained resilient. But resilience masks a problem that tends to reveal itself at the worst possible moment: the asymmetry between losses and the returns needed to recover them.

A 30% drawdown requires a 43% recovery just to break even. For a client five years from, or already in, retirement, that maths becomes genuinely threatening. It isn't just uncomfortable. It can permanently alter the trajectory of a portfolio that was otherwise well-constructed.

This is the sequencing problem. And it isn't solved by reducing equity exposure across the board. Cutting equity weights protects against downside but sacrifices the growth that retirement portfolios still need, often for decades.

The answer isn't less equity. It's better-structured equity.

What structuring actually means

Rather than simply modulating how much equity exposure a portfolio holds, structuring means shaping how that exposure behaves, defining where downside begins, and under what conditions capital is at risk.

A typical autocall structure, for example, offers a defined return, often in the region of 8 to 10% per annum, provided the underlying index remains above a set level on scheduled observation dates. Capital is only at risk if the index falls below a defined barrier, typically set around 60-65% of its starting value.

That barrier matters. It means the client isn't exposed to the full force of a market correction unless markets fall very significantly and sustain that fall. In practice, this changes the character of the equity risk being carried, not just the quantity of it.

For advisers whose clients are asking how to stay invested without being fully exposed to a sharp sell-off, that's a meaningful answer.

Why the current environment sharpens this

Several things make this particularly relevant right now.

Markets near record highs create a specific challenge: the cost of being wrong is asymmetric. The upside from here may be meaningful, but so is the potential for a retracement. For clients who cannot afford to ride out a full cycle, that asymmetry needs to be managed actively.

At the same time, the correlation assumptions that once made traditional portfolio construction predictable have become less reliable. When different asset classes move together in a downturn, as they did in 2022, the usual mechanisms for managing drawdown don't behave as expected. Introducing payoff profiles that are structurally different to both equities and bonds adds a genuine diversification dimension that isn't available through allocation alone.

A note on perception

Structured products are sometimes treated as a specialist or aggressive tool. In practice, many advisers use them for exactly the opposite reason, as a deliberate mechanism to moderate risk within a portfolio that remains meaningfully invested.

The structure doesn't eliminate downside. It defines where the downside begins. That distinction matters, and advisers who understand it are better placed to use these instruments in the right context.

The practical implication

Advisers who are genuinely thinking about how to keep clients invested through uncertain markets, without leaving them exposed to the full impact of a sharp correction, have a specific problem that requires a specific kind of answer.

The allocation decision is one part of that. But the more important question is what shape that exposure takes, and whether clients are carrying risk they understand and need, or risk they've simply inherited by default.

That's the conversation worth having.

To find out more about how we utilise structured investments within our managed portfolio service proposition aimed at financial advisers and intermediaries, please contact me on 020 3100 8157 or joe.simpson@wcgplc.co.uk.

Joe Simpson
Director, Investment Management


Structured products are capital-at-risk investments and are not suitable for every client. Past performance is not a reliable indicator of future results. This article is for professional advisers only and does not constitute advice.

The value of any investment can go down as well as up, and you may get back less than you invest. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority (FRN: 226344).