NEW YORK, NY / ACCESSWIRE / March 26, 2024 / The global structured notes market has been growing for some time and now totals a whopping $3 trillion. But just what is a structured note? It's actually a hybrid security financial institution's issue as debt, but whose outcome is linked to an underlying stock's performance.
Historically, investments in structured notes have been limited to top-tier earners. However, today alternative investment platform Yieldstreet has made such offerings accessible, with low minimums and short durations. The platform's opportunities traverse investment themes that include consumer, diversified, and tech portfolios.
With that said, here are five benefits of adding structured notes to your portfolio.
Notes Shield Against Market Fluctuations
This protection is a primary benefit of structured notes since a risk-adjusted return is basically assured even if the market is declining. This feature makes notes particularly attractive to investors who lean toward risk aversion. Not only can structured notes diversify portfolios, but they can add reliability. A well-structured note provides maximum returns with optimum protection levels.
Note Results Are Predictable
Because all the conditions that determine a structured note's outcome are set forth up front, structured notes are generally predictable investments. Known elements include the note's issuing bank, underlying assets, frequency, and barriers that serve as protection. It is the market behavior of the underlying assets that can't be predicted. Regardless, though, the investment still remains protected.
Notes Have Known Maturity Dates
Returns are pre-defined for delivery on specific dates, which helps the investor markedly when it comes to financial planning. Structured notes are growth securities, so there may be a set period over which returns are periodically generated. Under certain conditions - when the index exceeds the initial investment, for example -- auto-calls can mature early on pre-established anniversary dates. For those investing in an auto-call, prospects for early maturity can render the reinvestment option even more rewarding.
Notes Serve to Diversify Portfolios
Building a more modern investment portfolio composed of a variety of asset classes with varying expected performances is essential to mitigate overall risk. The idea is that if one asset class is decreasing, other classes have an opportunity to perform well. In fact, diversification is an essential pillar of long-term investing success. Diversifying portfolios with structured notes can also protect against inflation and even improve returns.
With Notes, Market Growth is Unnecessary for Returns
When investing in equity markets, a positive return is commonly dependent upon the growth - or lack thereof - in equity of the underlying investment. But to gain profits on maturity in structured notes, the underlying asset allocation on a pre-established generally must just exceed initial levels. Thus, gains are possible in structured notes even in a flat or only modestly increasing market.
Now that you have structured notes explained, you can see the array of advantages of adding the hybrid securities to your investment holdings. While every investment carries some degree of risk, structured notes can provide steady income - even in uncertain markets.
Contact Information
Seba Koshy
Account Manager
[email protected]
SOURCE: Yieldstreet
View the original press release on newswire.com.