Structured products
Structured products are designed to provide potential returns while protecting principal against downside risk. This type of investment typically has two components — a principal component and a performance component. Potential returns depend on the performance of the asset(s) that are linked to the structured product.
How can structured products help you?
- Diversification. Structured CDs and notes may provide diversification to a portfolio by offering investors exposure to asset classes that can be difficult to access directly, such as commodities, currencies and emerging markets.
- Reduced downside risk. Structured products decrease downside portfolio volatility while maintaining market exposure.
- Principal protection. At the end of the fixed maturity term, your principal will have been protected if you select a 100% principal protected note or CD (see important disclosures below), and your investment has the possibility of gaining returns depending on the underlying assets in the structured product.
Ameriprise Financial currently offers two types of 100% principal-protected structured products — principal protected notes and FDIC-insured structured Certificates of Deposit (CDs). Structured notes and CDs are issued with term lengths. Principal protection applies if investments are held until maturity. Ameriprise Financial also offers principal-at-risk structured products.
100% Principal-protected notes
Ameriprise Financial offers principal-protected structured notes that are issued by third-party banks. All notes sold through Ameriprise Financial are registered with the SEC and offer principal protection subject to the creditworthiness of the issuer.
FDIC-insured structured CDs
Structured CDs are issued by U.S. banks and the principal protection is backed by FDIC insurance up to applicable limits. CDs also include a death put; therefore an estate does not have to hold the investment until maturity to receive principal protection.
Principal-at-risk structured products
Principal-at-risk structured products (excluding reverse convertible notes) offer partial or no protection and leveraged, or enhanced, performance potential. These structures generally have maturity ranges from three months to five years. Principal protection is available on fully protected notes and structured CDs if the issue is held until maturity and is subject to the creditworthiness of the issuer.
Reverse Convertible Notes are designed to provide some downside protection along with enhanced coupons. Term lengths are generally between 3 and 12 months. The underlying asset is usually a single stock, and if the price of the stock falls below a pre-determined threshold, the investor may receive the physical stock at maturity rather than cash. The coupons to investors are typically significantly higher than coupons generated from direct ownership when the stock is trading relatively flat. Investors who think that the underlying stock will trade relatively flat and not fall below the pre-determined threshold may consider a reverse convertible and enhanced coupon. Coupons and return of principal are subject to the creditworthiness of the issuer.
Structured products generally do not trade and are not liquid. Investors should be able and willing to hold their structured product investment until maturity.
Principal protection is subject to the creditworthiness of the Issuer. Structured product holders may lose up to 100% of their investment upon the bankruptcy of the Issuer, even if the value of the referenced asset is favorable.
Investors in structured products should bring the applicable term sheet and prospectus to their tax advisor for consultation.
CDs are generally FDIC insured up to the applicable limits. However, it is not certain that in the case of Structured CDs that the return component of the value of the Structured CDs will be covered by FDIC insurance.
Structured products are distributed by Ameriprise Financial, but are issued by third party sponsors.
Diversification helps you spread risk throughout your portfolio, so investments that do poorly may be balanced by others that do relatively better. Diversification is not a guarantee of overall portfolio profit or protection against loss.
Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some products and services described may not be available in all jurisdictions or to all clients.
Structured products may or may not be federally or FDIC-insured, deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.