Which type of asset guarantees a minimum level of return while also providing upside tied to a risky asset?

Equity Linked Structured Products are designed to provide a combination of capital protection and the potential for enhanced returns, which is exactly what the question describes. These financial instruments typically offer a guaranteed minimum return along with the opportunity to participate in the performance of an underlying equity asset or index. This structure helps investors gain exposure to market upside while limiting their downside risk to a predefined level.

In contrast, bonds usually provide fixed interest payments and principal repayment but do not intrinsically link the return to a risky asset's performance. Real Estate Investment Trusts (REITs) invest in real estate and can provide returns through rental income and capital appreciation, but they don't guarantee a minimum return since performance is tied to real estate market fluctuations. Mutual Funds, while diversified, depend on the performance of various underlying assets without guaranteeing minimum returns. Therefore, the nature of Equity Linked Structured Products aligns perfectly with the premise of providing downside protection while allowing for potential upside linked to a risky asset.