Growth Structured Notes: An Overview

Growth Structured Notes: An Overview

Growth structured notes are a kind of investment that lets you earn money based on the performance of an underlying asset, like a stock or a group of stocks. Each has different features that can affect how much money you can make and how risky it is.

Rates impact earnings

One thing that affects your earnings is the “participation rate.” This simply means how much of the asset’s growth you get to take part in. If the participation rate is 120% and the asset goes up by 10%, you would make 12%.

Another feature is the “cap rate.” This sets a limit on how much you can make. For example, if the cap rate is 12% and the asset goes up by 15%, you would only make 12%. The cap rate helps protect you from losing money, but it also limits your potential earnings.

In addition to rates, other note features help your investment grow.

Additional features

Some growth structured notes have a “buffer,” or “cushion” feature. This protects you from losing money if the asset goes down by a certain amount. For example, if the buffer is 10% and the asset goes down by 8%, you won’t lose any money.

Finally, some notes have an “auto-call” feature. This means you receive a return if the asset reaches a certain level within a certain time. For example, if the auto-call is 120% and the asset reaches that level within two years, you would get a return and the note would end.

Are growth structured notes right for your portfolio? 

If you have questions or would like to learn more about structured notes and whether they are right for your portfolio, feel free to reach out to us here at Good Life Asset Strategies.

The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.