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What are Growth Focused Structured Notes?

Growth focused structured notes are custom issued investment products that can provide investors with indirect exposure to underling indices or assets.

The return of public equities, either through indices, ETFs, or single stocks, as well as commodities and currencies can be indirectly accessed via a structured note, expanding an investor’s opportunity set. These products can be approximately replicated through the combination of an underlying asset linked derivative, with the equivalent of a zero-coupon bond, which can work to either provide principal repayment at maturity or provide continual downside protection through to maturity. These methods for downside protection are typically outlined in the terms of the product along with other specifications such as the participation rate, maximum payment, minimum payment, and time to maturity.

Structured investments are not an asset class, rather they are an implementation tool for client portfolios that can be tailored to express a particular view on the markets or enhance a portfolio’s outcome. Structured products may provide similar characteristics to alternative asset allocated portfolios while seeking to capitalize on public market assets such as equities. 

There are also risks that an investor must be aware of when investing in growth focused structured products. An investor considering an investment in growth focused structured notes should carefully consider any related material describing such a product, including the specific risks. These risks include:

  • market risk,

  • credit risk,

  • illiquidity risk,

  • capped return,

  • no direct ownership of the underlying assets,

  • returns may underperform broader market,

  • tax considerations,

  • origination costs, and

  • no dividends or interest payments.

Authored by

Nic Millikan, CFA, CAIA
Nic Millikan, CFA, CAIA

Head of Investment Strategy | CAIS

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Nicholas Reade
Nicholas Reade

Investment Strategy Analyst | CAIS

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If you would like to learn more about structured products or if you have additional questions, please reach out to a CAIS Structured Products Representative.

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