The market downturn has lead investors to revise their risk versus return profiles, which may prompt more innovative structured products, according to a regional product development director.
"During times when people are experiencing a bull market they just want the upside. They just say [they] want the highest participation... the highest leverage... to get 20 or 30 per cent return," JP Morgan executive director head of Asia equity exotics Gregory Yu said.
"People have been brought back to earth with the realisation if you do not take on that kind of risk, you will not be able to take on that kind of return," he said.
The greater focus on risk has presented opportunities to develop new techniques that will provide capital protection for investors.
JP Morgan has implemented some new techniques in overseas markets, with more strategies to be launched in the coming year.
One technique is to actively manage an index linked portfolio with an individual's target risk level, to manage the volatility the investor will be exposed to.
"I could create an S&P 500 Target Risk Series with a target volatility of 15 per cent. According to that target I will dynamically allocate an exposure to this index in accordance to the realised volatility of the S&P 500.
"In the case where the S&P 500 goes up 30 per cent in realised volatility, I would drop my participation in the index down to half." Yu said.
The series is expected to be launched in early 2009 and will offer investments in indexes such as South East Asia, the BRIC economies, clean energy, global infrastructure and water.
