Professional Documents
Culture Documents
• Structured Notes are investment vehicles Most bonds offer a fixed rate of interest. But the
performance of a Structured Note is derived from
issued as either registered securities, non- the performance of a selected underlying asset,
registered notes, or as certificates of and the interest payment is linked to performance
deposit. Registered securities are led with of that asset. Therefore returns can be variable.
the SEC/SEBI as medium term notes. Underlying assets can include:
– One or more equity indices
• Structured Notes are issued by domestic and – Individual stocks or Exchange Traded Funds
foreign banks to help fund their lending – Commodities
programs. – Foreign currency
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Risks in Structured Notes contd.. Suitability of SN
• Market Risk - The risk that little or no interest • Would like the potential to earn higher
may be payable over the life of the note as returns, while enjoying the comfort and
returns are based on the performance of the security of having their principal
underlying market index or asset.
guaranteed but understand that no
• Reinvestment - The risk of a lower interest
interest or yield may be payable;
rate environment at the time interest
payments are received or an investment • Are long term/buy-and-hold investors
matures and, as a result, reinvesting in lower- who will not require their investment
yielding products. returned for period cash flow;
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Booster-Plus Notes Booster-Plus Notes contd..
• Booster-Plus Notes are Principal Protected Notes
that may be appropriate for investors caught in
very uncertain markets. The Booster Note works
well in a bull market, but also performs well in a
at to bearish market.
• Booster Notes typically offer an above average
return up to a certain barrier on the upside while
also providing a limited return based upon the
downside performance.
• Unlike Principal Protected Notes, Buffered • A Buffered Note typically offers increased upside
potential versus the more traditional Principal
Notes offer a limited amount of downside Protected Note as determined by the closing prices
protection. of the associated index, commodity, currency or
• For example, a Buffered Note may protect basket of stocks. The Participation Rate for a
Buffered Note is typically between 100% - 150%
the investor for the first 25% of erosion of on the upside and one-for-one exposure after the
the underlying asset; any decline in value first 25% decline on the downside.
beyond that is not protected. • Buffered Notes are appropriate for those with bull
market expectations – from slightly bullish to fully
bullish.