What are Market Linked CDs?
Market-Linked CDs (MLCDs) are FDIC-insured certificates of deposit (CDs), whose performance is linked to the return of an underlying asset or group of assets, which may include equities, commodities, currencies, or interest rates. There are a variety of structures available, which can allow investors to potentially:
Capitalize on a market view (bullish, bearish, or market neutral)
Complement an investment objective (conservative, moderate, or aggressive)
Gain exposure to a specific asset class or sector
Mitigate risk in a portfolio
Want to learn more about Market-Linked CDs? Check out this educational video.
Why MLCDs?
MLCDs are designed to provide investors with the ability to participate in the performance of the underlying asset or group of assets, while retaining certain characteristics of a traditional CD. When purchased at par and held to maturity, a MLCD generally provides 100% principal protection. Any potential returns are generally limited to a percentage of the underlying asset performance and may be capped.
It is important to highlight that Market-Linked CDs only guarantee principal back at maturity and thus if an investor sells or redeems their investment prior to maturity, they may receive a return of less than their original investment.
How to Invest
Our team at Claro Advisors is experienced in the structured note market and can be resource for investors looking for advice and access. Click here if you would like a member of our team to reach out to you.