DEFINITIVE GUIDE TO INVESTING IN STRUCTURED NOTES

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Author 11 Apr 2021

WHAT IS A STRUCTURED NOTE?
A structured note is a debt obligation typically issued by one of the large investment banks. The debt obligation—or “note”—is paired with a series of derivative investments designed to accomplish certain financial objectives if certain market events are reached or avoided.

Each structured note has a finite maturity date (however some may be called prior to maturity) and is subject to the credit of the issuer. They’re similar to any other corporate bond offering, however, there are some bells and whistles attached to them. It’s the bells and whistles that can make investing in structured notes attractive when used properly.

Structured notes are considered a “hybrid security” because they’re not a “traditional” investment like stocks or bonds. Rather, structured notes have characteristics of both bonds and stocks.

Several of the large investment banks create and issue structured notes. Some of the major offerings you may find are:

√Goldman Sachs structured notes
√Credit Suisse structured notes
√HSBC structured notes
√Barclays structured notes
√JP Morgan structured notes
√Fidelity structured notes
And several others . . .
It’s important to note that each bank issuing a structured note will have different pricing. Goldman Sachs structured notes may price attractively for a certain set of bells and whistles, yet JP Morgan structured notes may price better for a different set of bells and whistles. This makes price shopping structured notes critically important for the investor.

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