Abstract: Using a large administrative panel of Swedish households, we document the fast and broad adoption of retail structured products, an innovative class of contracts offering non-linear exposures to equity markets. Households investing in structured products differ from traditional stock market participants on key characteristics and signifcantly increase their equity exposures over the sample period. The introduction of retail structured products thereby raises both the likelihood and the extent of stock market participation, especially for households with lower wealth and IQ and of older age. The design of purchased products varies strongly with household characteristics, suggesting the importance of heterogeneity in preferences and financial circumstances. A simple portfolio choice model shows that household loss aversion best explains the demand for structured products and the empirical facts we observe. Our results illustrate how financial innovation can mitigate investor behavioral biases.