The offshore deposit most people haven't considered
When you think about offshore savings, two familiar options jump immediately to mind: a fixed deposit that pays a set rate regardless of what markets do, or a market-linked investment that rises and falls in tandem with the stock market fortunes.
Structured deposits sit in a different position. They are fixed-term deposits linked to the performance of global stock market indices, with one feature that sets them apart: if markets fall over the term, your original deposit is designed to be returned in full, provided you hold the deposit to its maturity date.
If markets rise, you participate in that growth.
It’s an arrangement that doesn’t get as much attention as it probably should, and one that works rather differently depending on how each product is designed.
How structured deposits work
The basic mechanics are these. You commit a deposit for a fixed term, typically between four and five years. Over that period, the return on your deposit is linked to how a specific stock market index, or a basket of indexes, performs. The deposit doesn’t require active trading decisions, with returns determined by market performance over the full term.
At maturity, two things can happen. If the index your deposit is tracking has grown over the term, you receive your deposit back plus a return linked to that growth, subject to holding to maturity. If the index has fallen, your original deposit is designed to be returned at maturity.
What distinguishes structured deposits from a standard fixed deposit is the connection to market performance: the return is not predetermined. What distinguishes them from direct market investment is that the underlying deposit is designed to be returned at maturity, provided the deposit is held for its full term.
How they differ from one another
Where structured deposits become genuinely interesting is the range of options available across return types, markets and currencies.
On the return side, some products offer a defined outcome: a fixed percentage if markets are flat or positive over the term. Others offer a proportional share of actual index growth, uncapped. Others still split the deposit between a portion that earns a fixed rate in the short term and a portion that tracks markets over a longer horizon.
The markets on offer are just as varied.
Depending on the product and the currency of your deposit, you might be tracking the Shanghai Shenzhen CSI 300 – one of China's primary equity benchmarks, covering 300 companies across some of the world's fastest-growing sectors.
You might track the S&P 500 if your deposit is in US dollars, or the S&P United Kingdom Index for sterling. Some products take a wider view still, linking returns to a weighted basket of indices drawn from multiple regions at once.
What this means in practice is that your currency choice is often also a market choice because the currency typically determines which market your deposit tracks. US dollars for US indexes, Australian dollars for the ASX and pound sterling for the UK market.
For internationally mobile clients managing savings across more than one currency, that breadth can be a meaningful advantage.
Which type suits your situation?
The starting point is an honest question: do you want to know the outcome before you commit, or are you comfortable letting the market determine it?
If predictability matters most – perhaps because you’re planning around a specific date, a property purchase, or a retirement milestone – a defined-return deposit gives you that clarity. The return is set from the start. You know the best case and the worst case before any money moves.
If you want to stay connected to market performance but are cautious about locking your entire deposit away for a long term, a split-structure deposit offers a middle path.
Part of your deposit returns relatively quickly at a fixed rate; the rest continues working in global markets with no ceiling on what it can earn.
If you’re comfortable with a longer horizon and want uncapped participation in index growth a proportional-return deposit may suit your outlook better. Your return reflects what the market actually does, which can work significantly in your favour over a five-year term if conditions are right.
Your Relationship Manager can help you work through which product aligns with your current financial position and goals. You can also read the full product brochures on our Structured Products page.
DISCLAIMER
Capital protection refers to the product’s design to repay your original deposit in full, in the deposit currency, providing you retain your deposit to the Maturity Date. Where a structured deposit’s return at the end of its term is zero, the depositor’s real rate of return may be negative.
The information provided in this article is for general information and educational purposes only and should not be construed as financial advice. This article does not take into account your individual circumstances, financial situation, or objectives. Before making any financial decision or investment, it is recommended that you consult with a qualified financial advisor or conduct your own research. Standard Bank is not liable for any losses or damages incurred as a result of any financial actions taken based on the information provided.