Animal Spirits Podcast Talk Your Book: Locking in Higher Yields on Your Portfolio
May 14, 2022
Dive into the world of structured products and defined outcome investing with insights from Jason Barsema. Explore how these unique investment vehicles can yield higher returns in a tricky interest rate landscape. Discover the advantages of structured notes as alternatives during market volatility, along with their risk-reward dynamics. Learn about the impact of rising interest rates on pricing and how customizable strategies can protect and generate income, making them appealing for retirement planning.
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Personal Structured Note Example
- Jason Barsema bought a 5-year structured note with 40% downside protection, tied to the S&P 500.
- This note offers 110% of the S&P 500 upside, sacrificing dividends for enhanced returns.
Market Impact on Structured Notes
- Increased market volatility and rising interest rates impact structured note pricing.
- Higher volatility and rising rates increase the potential returns on these notes.
Dollar-Cost Averaging into Structured Notes
- Dollar-cost average into structured notes during market downturns, similar to other long equities.
- Adjust protection levels based on market conditions; consider lower protection (e.g., 20%) if the market falls further.