How Structured Notes Can Fit Into a Diversified Investment Strategy

Structured notes are an alternative investment that can offer higher income potential—sometimes as much as 11%—while protecting principal under certain conditions. Unlike traditional CDs or stocks, they’re tailored to specific market outcomes. Damon & Travis Paull offer access to structured notes from firms like Apollo, BlackRock, and Voya to help clients in Houston and Richmond diversify with confidence.

 

What Are Structured Notes, Really?

Structured notes are customizable investment products that blend elements of bonds and derivatives. They're designed to offer defined outcomes—such as fixed returns or principal protection—based on the performance of a linked index or asset (like the S&P 500). The biggest appeal? You can potentially earn more than what a CD or savings account offers, without the same level of market exposure as owning stocks outright.

 

Why Clients Are Asking About Them Now

With traditional bank savings rates still lagging behind inflation, and market volatility unsettling even seasoned investors, structured notes are seeing renewed interest. In both our Houston and Virginia offices, clients are asking how they can earn more income without assuming more risk. Structured notes offer a possible solution—especially when designed with downside protection and backed by credible issuers.

How They Work

Here’s a simplified example:

• A structured note might offer 11% annual income as long as the S&P 500 doesn’t fall more than 25%.
• If the index stays within the agreed range, you receive that income regardless of whether the market rises or stays flat.
• If the index drops beyond the buffer, your principal could be at risk—but often with structured protection layers in place.

Structured Notes vs Traditional Investments

• Structured Notes
  ✔ Potential for higher yields
  ✔ Custom outcome features
  ✔ Defined risk-reward profile
  ✔ Backed by major institutions like Apollo and BlackRock
• Traditional CDs or Bonds
  ✔ Low risk, but low returns
  ✔ Limited customization
  ✔ Less responsive to inflation

We’re not saying structured notes replace your core investments—but they may complement them, especially for income-focused or risk-aware strategies.

 

Who Structured Notes May Work For

• Conservative investors looking to earn more than CDs without full equity risk
• Pre-retirees seeking predictable income
• High-net-worth individuals wanting to diversify outside traditional stock/bond portfolios
• Anyone seeking FDIC-like protection features without sacrificing growth potential

What to Watch Out For

Not all structured notes are created equal. Some are complex, opaque, or come with liquidity restrictions. That’s why our role is essential—we help you:

• Evaluate the credit strength of issuers
• Understand term sheets and downside protection mechanics
• Ensure alignment with your risk profile and income needs

We never recommend products we wouldn’t use ourselves or explain clearly.