Constant proportion portfolio insurance
CPPI appeals to investors because it combines defensive and aggressive strategies in one instrument: protection of principal alongside leveraged trading. No surprise that it is being talked about as 2006's hot ticket
"Each year, it seems, the structured credit market rolls out the "new next big thing" in synthetic risk transfer," notes a report published by Standard & Poor's in February 2006. "In 2004, it was the CDO-squared product. In 2005, it was the turn of leveraged super-senior transactions. Among the contenders for 2006 is credit-based constant proportion portfolio insurance (CPPI)."
Credit CPPI products are designed to protect investors' principal while simultaneously offering them upside potential
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