DOCSLIB.ORG

Structured Product

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Structured Product June 30, 2021 Strategy Profile Structured Product The Western Asset Structured Product strategy provides a broad and opportunistic exposure to Western Asset at a Glance As of 30 Jun 21 the structured product market. The strategy aims to maximize total return and add value through subsector rotation and security selection while managing overall portfolio risk. The strategy invests Founded in 1971. Specialist Investment Manager of in a diversified portfolio using all structured product sectors, including non-agency residential mort- Franklin Resources, Inc. gage-backed, commercial mortgage-backed and asset-backed securities. since July 31, 2020 Fixed-income value PERFORMANCE investors Structured Product Composite* (Gross) Structured Product Composite* (Net) $491.3 billion (USD) AUM 12 10.3 • $437.1 billion (USD) 9.5 long-term assets 9 • $54.3 billion (USD) cash 6.3 6.5 6.1 5.5 5.8 5.5 and cash equivalent 6 assets 3.1 2.3 772 employees 3 Return (%) Total 0 1 Year 3 Years 5 Years 10 Years Since Inception 01 Aug 07 Source: Western Asset. As of 30 Jun 21 Returns for periods greater than one year are annualized. Please see the Performance Disclosure for more information. *The Structured Product Composite is not measured against a benchmark. There is no benchmark available which appropriately reflects the strategy. STRATEGY RISK INFORMATION 1 Year 3 Year 5 Year 10 Year Since Inception Standard Deviation 2.80 13.22 10.34 7.80 9.11 Sharpe Ratio 3.50 0.21 0.54 0.77 0.63 Source: Western Asset. As of 30 Jun 21 WHY CONSIDER THIS STRATEGY? Attractive yield potential: Invests in mortgage-backed securities and consumer loans, a sector that has evolved with better underwriting and loan quality leading to a higher quality asset class Portfolio diversification: Relatively low correlation to other fixed-income sectors offers a compli- ment to existing fixed-income holdings and a good diversifier in a broad portfolio Lower rates sensitivity: Focus on adjustable/floating rate securities can provide some immunity in a rate rising environment Appealing opportunities: Since the financial crisis, increased transparency and improved risk standards have led to a higher quality asset class, with better underwriting standards that require income verification and more equity in the property Strategy Profile Structured Product INVESTMENT OBJECTIVE Why Western Asset Fixed-income specialist Maximize total return consistent with prudent investment management. Team-based approach Global presence BENCHMARK Experience and capacity The Structured Product Strategy is not measured against a benchmark. There is no benchmark available Client service focused that appropriately reflects the strategy. Solutions-based Strategic importance of VEHICLES the institutional client Separate Account, Commingled segment POSITIONING (%) Portfolio Characteristics As of 30 Jun 21 Sector Breakdown Weight (%) Yield (%) Leverage: None Residential Mortgages 56.1 4.6 Credit Quality: B+ GSE Risk Transfer 20.2 5.1 Legacy Residential Mortgages 19.8 4.6 Effective New-Issue RMBS 16.0 3.9 Duration: 3.88 years Other Residential Mortgages 0.2 5.1 Spread Commercial Mortgages 28.4 10.9 Duration: 4.80 years Large Loan Credit (SASB) 23.7 11.2 Yield-to-Worst: 6.14 years Agency CMBS 2.3 6.9 Conduit Credit 1.9 13.0 Small Balance/Legacy AJ/AM 0.2 22.7 Opportunistic ABS 7.9 4.5 Credit Hedge 0.0 0.0 Treasury 6.5 0.9 Cash 1.1 0.1 Grand Total 100.0 6.1 Credit Quality (%) Portfolio AAA 7.7 AA 1.1 A 3.6 BBB 6.1 <BBB 81.6 Source: Western Asset. As of 30 Jun 21 Note: Sector allocation includes look-through to any underlying commingled vehicles if held. All weightings are a percentage of total market value. A negative cash position may be reported, which is primarily due to the portfolio’s unsettled trade activity. Data may not sum to 100% due to rounding. The information provided is supplemental to the Structured Product Composite. Please see performance disclosure for more information. INVESTMENT STRATEGY AND PROCESS Historical Sources The strategic goal at Western Asset is to add value to client portfolios while adhering to a disciplined of Returns risk control process. The Firm’s investment philosophy combines traditional analysis with innovative 1 Year technology applied to all sectors of the market. Western Asset believes inefficiencies exist in the NA RMBS CRT 4.57% fixed-income markets and attempts to add incremental value by exploiting these inefficiencies across NA RMBS Legacy/Other 5.18% all eligible market sectors. NA CMBS Legacy -0.03% NA CMBS New Issue 0.45% ABS 0.77% Treasury -0.33% Other -0.07% Total 10.54% © Western Asset Management Company, LLC 2021. This publication is the property of Western Asset and is intended for the sole use of its clients, consultants, and other intended recipients. It should not be forwarded to any other person. Contents herein should be treated as confidential and proprietary information. This material may not be reproduced or used in any form or medium without express written permission. Past results are not indicative of future investment results. This publication is for informational purposes only and reflects the current opinions of Western Asset. Information contained herein is believed to be accurate, but cannot be guaranteed. Opinions represented are not intended as an offer or solicitation with respect to the purchase or sale of any security and are subject to change without notice. Statements in this material should not be considered investment advice. Employees and/ or clients of Western Asset may have a position in the securities mentioned. This publication has been prepared without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation or needs. It is your responsibility to be aware of and observe the applicable laws and regulations of your country of residence. Western Asset Management Company Distribuidora de Títulos e Valores Mobiliários Limitada is authorised and regulated by Comissão de Valores Mobiliários and Banco Central do Brasil. Western Asset Management Company Pty Ltd ABN 41 117 767 923 is the holder of the Australian Financial Services Licence 303160. Western Asset Management Company Pte. Ltd. Co. Reg. No. 200007692R is a holder of a Capital Markets Services Licence for fund management and regulated by the Monetary Authority of Singapore. Western Asset Management Company Ltd is a registered Financial Instruments Business Operator and regulated by the Financial Services Agency of Japan. Western Asset Management Company Limited is authorised and regulated by the Financial Conduct Authority (“FCA”) (FRN 145930). This communication is intended for distribution to Professional Clients only if deemed to be a financial promotion in the UK as defined by the FCA. This communication may also be intended for certain EEA countries where Western Asset has been granted permission to do so. For the current list of the approved EEA countries please contact Western Asset at +44 (0)20 7422 3000. Performance and Risk Disclosures June 30, 2021 Rolling 1-Year Performance Returns Period Ending: 30 Jun 21 30 Jun 20 30 Jun 19 30 Jun 18 30 Jun 17 Structured Product Composite (gross of fees) 10.29% -7.52% 7.43% 10.23% 12.53% Structured Product Composite (net of fees) 9.48% -8.22% 6.64% 9.42% 11.70% Base Currency: USD Past investment results are not indicative of future investment results. Source for performance figures is Western Asset. Please refer to the Performance Disclosure for more information. Currency exchange rate fluctuations will impact the value of your investment. The value of investments and the income from them may go down as well as up and you may not get back the amount you originally invested. Investment Risks: The strategy does not offer any capital guarantee or protection and you may not get back the amount invested. The strategy is subject to the following risks which are materially relevant but may not be adequately captured by the indicator: Asset-Backed Securities: The timing and size of the cash-flow from asset-backed securities is not fully assured and could result in loss for the strategy. These types of investments may also be difficult for the strategy to sell quickly. Bonds: There is a risk that issuers of bonds held by the strategy may not be able to repay the investment or pay the interest due on it, leading to losses for the strategy. Bond values are affected by the market’s view of the above risk, and by changes in interest rates and inflation. Concentrated: The strategy's investment approach may result in the strategy being focused in one, or a small number of, countries, sectors or asset classes compared to other investment strategies. This means that the strategy may be more sensitive to economic, market, political or regulatory events than other strategies that invests across a broader range of countries, sectors and asset classes. Derivatives: The strategy makes significant use of derivatives. The use of derivatives can result in greater fluctuations of the portfolio's value. Interest Rates: Changes in interest rates may negatively affect the value of the strategy. Typically as interest rates rise, bond values fall. Low-rated Bonds: The strategy may invest in lower rated or unrated bonds of similar quality, which carry a higher degree of risk than higher rated bonds. Mortgage-Backed Securities: The timing and size of the cash-flow from mortgage-backed securities is not fully assured and could result in loss for the strategy. These types of investments may also be difficult for the strategy to sell quickly. This strategy is managed by Western Asset. This information is only for use by professional clients, eligible counterparties or qualified investors.
Load more

Recommended publications
  • Ex-Post Structured Product Returns: Index Methodology and Analysis
    Ex-post Structured Product Returns: Index Methodology and Analysis Geng Deng, PhD, CFA, FRM∗ Tim Dulaney, PhD, FRMy;z Tim Husson, PhD, FRMx;z Craig McCann, PhD, CFA{ Mike Yan, PhD, FRMk August 20, 2014 Abstract The academic and practitioner literature now includes numerous studies of the substantial issue date mispricing of structured products but there is no large scale study of the ex- post returns earned by US structured product investors. This paper augments the current literature by analyzing the ex-post returns of over 20,000 individual structured products issued by 13 brokerage firms since 2007. We construct our structured product index and sub- indices for reverse convertibles, single-observation reverse convertibles, tracking securities, and autocallable securities by valuing each structured product in our database each day. The ex-post returns of US structured products are highly correlated with the returns of large capitalization equity markets in the aggregate but individual structured products generally underperform simple alternative allocations to stocks and bonds. The observed underperformance of structured products is consistent with the significant issue date under- pricing documented in the literature. ∗Director of Research, Securities Litigation and Consulting Group. yFinancial Analyst, U.S. Securities and Exchange Commission, [email protected]. zThe Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private pub- lication or statement by any of its employees. The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author's colleagues upon the staff of the Commission. xFinancial Analyst, U.S.
    [Show full text]
  • Analysis of Securitized Asset Liquidity June 2017 an He and Bruce Mizrach1
    Analysis of Securitized Asset Liquidity June 2017 An He and Bruce Mizrach1 1. Introduction This research note extends our prior analysis2 of corporate bond liquidity to the structured products markets. We analyze data from the TRACE3 system, which began collecting secondary market trading activity on structured products in 2011. We explore two general categories of structured products: (1) real estate securities, including mortgage-backed securities in residential housing (MBS) and commercial building (CMBS), collateralized mortgage products (CMO) and to-be-announced forward mortgages (TBA); and (2) asset-backed securities (ABS) in credit cards, autos, student loans and other miscellaneous categories. Consistent with others,4 we find that the new issue market for securitized assets decreased sharply after the financial crisis and has not yet rebounded to pre-crisis levels. Issuance is below 2007 levels in CMBS, CMOs and ABS. MBS issuance had recovered by 2012 but has declined over the last four years. By contrast, 2016 issuance in the corporate bond market was at a record high for the fifth consecutive year, exceeding $1.5 trillion. Consistent with the new issue volume decline, the median age of securities being traded in non-agency CMO are more than ten years old. In student loans, the average security is over seven years old. Over the last four years, secondary market trading volumes in CMOs and TBA are down from 14 to 27%. Overall ABS volumes are down 16%. Student loan and other miscellaneous ABS declines balance increases in automobiles and credit cards. By contrast, daily trading volume in the most active corporate bonds is up nearly 28%.
    [Show full text]
  • RETAIL Structured Solutions. You Have a Right to Expect Stability and Excellence from Product Providers
    RETAIL STRUCTURED SOLUTIONS RETAIL Structured Solutions. You have a right to expect stability and excellence from product providers. Since 1995 we have managed all aspects of structured products. This is the expertise we bring to WE would reallY liKE to worK witH looking after over 250,000 customers. You and APPreciate Your FeedBacK. This is not a consumer advertisement. It is intended for professional financial advisers and should not be relied Our team are always on hand to talk to you about your needs, with a dedicated upon by private investors or any other persons. Structured Solutions team to support your strategy and future goals. We appreciate that turbulent markets have meant that professional investors such as yourselves are keener than ever to work with a stable, established company, who can offer you the assurance you need. CONTACT US Please contact your Legal & General representative or the Retail Structured Solutions team at [email protected]. Details of our latest products can be found at www.landgstructuredproducts.com This document should not be taken as an invitation to deal in any Legal & General investment including the stated investment. If investors cash in any or all of their investment early then they may get back less than they invest. Legal & General (Portfolio Management Services) Limited Registered in England No. 2457525 Registered office: One Coleman Street, London EC2R 5AA Authorised and regulated by the Financial Conduct Authority. CW4018 07/13 H142530 2 RETAIL STRUCTURED SOLUTIONS LEGal & General GrouP. Legal & General is a leading provider of risk, savings thriving and that Legal & General’s double-digit sales and investment management products in the UK.
    [Show full text]
  • Best Practices for Structured Products Designed for Individual Investors
    ISDA® LIBA Structured Products: Principles for Managing the Distributor- Individual Investor Relationship The distributor-individual investor relationship should deliver fair treatment of the individual investor. Individual investors need to take responsibility for their investment goals and to stay informed about the risks and rewards of their investments. Distributors can play a key role in helping them achieve these objectives. In this document, an "investor" means a retail investor who is not an institution, a professional, or a sophisticated investor, and a "distributor" refers to any institution or entity that markets or sells retail structured products directly to an individual investor. This will include an issuer of a retail structured product that markets or sells the same directly to individual investors. In light of the increased interest in structured products as part of individual investors’ investment and asset allocation strategies, it is important for firms to keep these principles in mind in their dealings with individual investors in structured products. These principles complement and should be read in conjunction with our recently released, “Retail Structured Products: Principles for Managing the Provider-Distributor Relationship,” available at the websites of the five sponsoring associations1, which focus on the relationship between manufacturers and distributors. These principles apply to the relationship between the distributor and the individual investor. Although these principles are non-binding (being intended
    [Show full text]
  • Speeder Plus Linked to Worst of Euro STOXX Banks Index / Financial Select Sector Index / TOPIX Banks Index Issued by UBS AG, London Branch
    Speeder Plus Linked to worst of Euro STOXX Banks Index / Financial Select Sector Index / TOPIX Banks Index Issued by UBS AG, London Branch Cash settled SVSP/EUSIPA Product Type: Bonus Outperformance Certificate (1330, Capped Participation) Valor: 39945157 / SIX Symbol: KAZPDU Final Terms This Product does not represent a participation in any of the collective investment schemes pursuant to Art. 7 ff of the Swiss Federal Act on Collective Investment Schemes (CISA) and thus does not require an authorisation of the Swiss Financial Market Supervisory Authority (FINMA). Therefore, Investors in this Product are not eligible for the specific investor protection under the CISA. Moreover, Investors in this Product bear the issuer risk. This document (Final Terms) constitutes the Simplified Prospectus for the Product described herein; it can be obtained free of charge from UBS AG, P.O. Box, CH-8098 Zurich (Switzerland), via telephone (+41-(0)44-239 47 03), fax (+41-(0)44-239 69 14) or via e-mail ([email protected]). The relevant version of this document is stated in English; any translations are for convenience only. For further information please refer to paragraph «Product Documentation» under section 4 of this document. 1. Description of the Product Information on Underlying Underlying(s) Initial Underlying Level Strike Level Kick-Out Level Cap Level Conversion Ratio EURO STOXX Banks Index 136.13 136.13 81.68 163.36 1:7.3459 100.00% 60.00% 120.00% Bloomberg: SX7E / Valor: 846500 Financial Select Sector Index 349.54 349.54 209.72 419.45
    [Show full text]
  • An Overview of Hedge Funds and Structured Products: Issues in Leverage and Risk
    An Overview of Hedge Funds and Structured Products: Issues in Leverage and Risk Adrian Blundell-Wignall With their high share of trading turnover, hedge funds play a critical role in providing liquidity for mis-priced assets, particularly when large volumes are traded in thin markets – thereby reducing volatility. This activity is particularly important, given the rapid growth in volume of new-generation structured products issued by investment banks. Hedge fund leverage estimated via an induction technique suggests a leverage ratio that must be above 3 (versus total AUM of USD 1.4 trillion). Gearing is required to boost returns where low risk and low return styles are implemented. Investment banks are well capitalised against hedge fund exposure. “Structured products” are one of the fastest growing areas in the financial services industry, and may already be over half of the notional size of the hedge fund industry (AUM plus leverage). These products, constructed by investment banks, are extremely complex using synthetic option replication techniques, and offering a variety of guarantees in returns. They are sold to retail, private banking and institutional clients. Hedge funds help reduce volatility risk for investment banks in supplying these products. Structured products are passive in nature (unlike hedge fund active styles), focusing on providing returns for different risk profiles of clients. These products have not been tested when major anomalies in volatility arise. They are highly exposed to downward price gaps in the „risky‟ assets used in their construction. Considering the potential for such a crisis scenario, two major policy conclusions emerge: The importance of (1) stress testing of investment banks‟ balance sheets; and, (2) given the large retail market segment, consumer education and protection.
    [Show full text]
  • GLOSSARY of FINANCIAL TERMS
    GLOSSARY oF FINANCIAL TERMS AAA rating The highest available rating from a credit rating agency, Structured Product representing the lowest credit risk of any class of debt securities. For our purposes, a bond backed by a pool of assets, such as mortgages. For example, the AAA tranches of a mortgage-backed security, a CDO, or a CDO squared are the highest rated, lowest risk tranches. Mortgage-Backed Securities The mortgages are pooled into Mortgage-Backed Securities. By the numbers Investors buy tranches of the securities Take a hypothetical $750 million mortgage-backed security backed by The mortgages are Financial pooled into 5,000 subprime mortgages of $150,000 each. Typically, about 80% or Financial institution Mortgage-Backed $600 million of these subprime mortgage-backed securities are rated AAA. institutions fund holds many Securities home purchases mortgages AA 5,000 mortgage loans of $750 million $150,000 each = mortgage-backed $750 million Investors buy security tranches of Homeowners securites sign mortgage Tranche The word tranche is French for slice, section, series, or portion. A 80% AAA $600 tranche is a portion of a structured product created such that each million divided into multiple tranches that have different risk characteristics. portion hasPool the of same cash �low characteristics.Tranches A structuredLower product yield is mortgage loans Lower risk AA and $150 20% lower tranches million AAA Now, if you take the CDO BBB and lower AAA AA tranches and repackage them into AAA A a CDO with other other AA BBB and lower and BBB tranches, over 83% AAA lower BB- Higher yield tranches unrated Higher risk or nearly $630 million of the CDO original $750 million other AA AA and A structured product which gives the bond holders the right to receive in mortgage-related and lower lower tranches the assets has now been AAA tranches backed securities.
    [Show full text]
  • Financial Instruments Structured Products Handbook ˆ Oesterreichische Nationalbank
    ≈√ Oesterreichische Nationalbank Financial Instruments Structured Products Handbook ˆ Oesterreichische Nationalbank Financial Instruments Structured Products Handbook Structured capital market products — including ever-new ones — have become increasingly complex in recent years. For market participants to be able to evaluate and control the risks involved, they must be well-grounded in the intricacies of these innovative instruments as well as in adequate valuation techniques. This publication is meant to provide all interested market participants with a reference work about the valuation and replication of the struc- tured bond products most widely traded in Austria. A partner institution of the Austrian credit institutions, the OeNB offers this service to all market players to ensure transparency. The first part of the handbook deals with structured bonds whose payoff properties depend on interest rate movements, and the following two parts focus on products whose payoff characteristics are shaped by equity prices and foreign exchange rates. The replication techniques presented in this handbook are meant to serve as exemplary approaches, e.g. to reporting the Austrian interest rate risk statistics or computing the regulatory capital requirement. This ensures increased transparency and objectivity during audits. Ultimately, the Oesterreichische Nationalbank aims to strengthen the confidence in the Austrian financial marketplace and to contribute in particular in the light of Basel II to its stability and competitiveness. Univ.-Doz. Mag.
    [Show full text]
  • Are Structured Products Suitable for Retail Investors? I. Introduction
    Are Structured Products Suitable for Retail Investors? Craig McCann, PhD, CFA and Dengpan Luo, PhD, CFA1 Equity-linked notes - a type of structured product - are securities issued by brokerage firms and traded in the secondary markets like shares of common stock. These investments offer part of the upside from owning stocks but limit nominal losses if held until maturity. Once sold only to sophisticated investors, structured products are increasingly being sold to unsophisticated retail investors. Equity-linked notes are difficult to evaluate and monitor, have high hidden costs and are illiquid. They are therefore virtually never suitable for unsophisticated investors. I. Introduction Sales of structured products have soared in recent years as brokerage firms have found a retail market for products once sold only to sophisticated investors. According to the Structured Products Association – a trade group representing issuers and vendors – almost $50 billion of structured products were sold in 2005.2 Structured products can be too complex and opaque for retail investors and registered representatives to understand. This complexity and opaqueness allows structured products to survive in the marketplace despite their marked inferiority to traditional portfolios of stocks and bonds. The NASD has taken notice. In the current investment environment, investors and brokers are increasingly turning to alternatives to conventional equity and fixed- income investments in search of higher returns or yields. Such products, including … structured notes … are often complex or have unique features that may not be fully understood by the retail customers to whom they are frequently offered, or even by the brokers who recommend them. Some appear to offer benefits to investors that are already available in the market in the form of less risky, less complicated, or less costly products, prompting concerns about suitability and potential conflicts of interest.
    [Show full text]
  • Retail Structured Products the Latest Regulatory Developments
    Retail Structured Products The latest regulatory developments Ash Saluja, Simon Morris & Michael Cavers 26 June 2014 Looking at … 1. What the current rules are for manufacturing, distributing and advising on retail structured products 2. How these rules are changing 3. Recent documentation changes – Prospectus Directive 4. Enforcement and Supervision 2 UK/EU regulatory background − Focus of EU regulation (e.g. Markets in Financial Instruments Directive) had been on the sales process rather than on product manufacture − Notable exceptions in the funds sector (i.e. UCITS funds) and for some aspects in relation to transferable securities (i.e. Prospectus Directive regime) − Very light touch on deposit products due to capital protection and (previous) confidence on solvency of banks − Completely different EU regulatory regime for sale of insurance products (Insurance Mediation Directive) − UK regime applies many similar rules to “designated investments” (includes securities/investment products and life insurance products with an investment element) − Changes to the rules now very much driven by EU reforms, which are focused on manufacturers as well as distributors 3 Policy drivers for change − “Patchwork of uncoordinated regulation” (MiFID, IMD, UCITS, PD) – need for harmonisation across sectors − Minimise discretions available to Member States to reduce differences in rules between jurisdictions − Market and technological developments have outpaced MiFID I, undermining the level playing field − The financial crisis has challenged previous
    [Show full text]
  • PRODUCT RULES for PACKAGED RETAIL PRODUCTS: WHY, WHEN, HOW? Discussion Paper in the Context of the Prips Regulation Proposal
    PRODUCT RULES FOR PACKAGED RETAIL PRODUCTS: WHY, WHEN, HOW? Discussion paper in the context of the PRIPs regulation proposal Summary and key points 1. The large number of financial product mis-selling cases in EU Member States is evidence that intervening at the point of sale is not always sufficient, and that it is preferable for all stakeholders to intervene earlier and prevent consumer detriment before it occurs rather than after. 2. As a significant portion of mis-selling cases is related to product failure, this requires in our view action targeted at this specific issue such as product design rules, within product governance. 3. The success of UCITS is evidence that a sound framework is valued by retail investors and that product investment rules do not have an adverse impact on choice and innovation. 4. Existing Member States product rules share a common purpose, and their tried and tested principles have significant overlaps. This should facilitate agreeing on a set of common principles without delaying the PRIPs file. 5. Based on existing product regulations, we propose a set of six principles. Such principles could be used either for banning detrimental features alternatively for a warning label on the KID. We believe that these principles would have prevented many of the recent mis-selling cases. 6. Based on the evidence from UCITS, such rules are expected to significantly strengthen investor protection with a neutral or positive impact on the industry. Such rules should contribute positively to reducing redress costs and reputational costs for manufacturers, and would have a positive impact on restoring investor confidence and engagement with financial markets.
    [Show full text]
  • Structured Products at Janney Montgomery Scott
    INVESTOR EDUCATION: INVESTMENTS STRUCTURED PRODUCTS AT JANNEY MONTGOMERY SCOTT Structured investments are debt securities derived from or based on a single security, basket of securities, index, commodity, foreign currency, or other asset classes. Janney offers two primary types of structured products—Market-Linked Certificates of Deposit (MLCDs) and Structured Notes. PRODUCT HIGHLIGHTS It is important for any investor to understand the features and risks of structured products before investing. Those features Structured products are a hybrid between two asset and risks are described in the prospectus. Credit quality of classes. Typically issued as an unsecured corporate bond the issuer, performance of the selected asset class, product or certificate of deposit with a fixed term, they include structure, liquidity, pricing, and tax treatment are important a derivative component whose cash flow and value are considerations when purchasing such an investment. determined from performance of another underlying investment or asset class. Structured products or market-linked investments: JANNEY’S STRUCTURED PRODUCTS • Can be purchased through an initial offering or in a Janney offers: limited secondary market. • Market-Linked CDs • Are issued as a bond or certificate of deposit (CD) with a fixed term or maturity. • Structured Notes • Have a specified underlying investment, the performance of which will determine cash flow, MARKET-LINKED CDS value, and investment return. Overview May include varying levels of capital “protection,” but • Market-Linked Certificates of Deposit (MLCDs) are are also subject to the risk that the issuer defaults or the structured products whose performance is largely based investment is not held to maturity, which may result in on one or more underlying securities or financial indexes.
    [Show full text]