Investments · Structured Products
Structured Notes & Capital Protected Investments
Structured products allow investors to access equity-linked returns with defined downside protection — combining the income potential of equities with the capital structure of bonds. From autocall notes to fixed-coupon loan notes, we source and advise on the full range of structured investment solutions for internationally mobile investors.
Product overview
The Structured Product Family
Structured notes are not a single product — they encompass a wide range of instruments with different risk profiles, return mechanics, and capital structures. Understanding the differences is essential to selecting the right product for a given investment objective.
Autocall Notes
Linked to an equity index or basket. Pay a conditional coupon if the underlying is above a barrier on observation dates. Autocall triggers early redemption if the index recovers to its initial level. Typical returns 8–14% p.a. contingent.
Suits: Investors seeking equity-linked income with conditional capital protection.
Capital Protected Notes
Structured to return 100% of invested capital at maturity regardless of underlying performance, plus a participation in the upside of an equity index or basket. Issued by investment-grade banks, typically 3–6 year terms.
Suits: Investors prioritising capital return while seeking some equity upside participation.
Reverse Convertibles
Pay a high fixed coupon regardless of market direction, but capital is at risk if the underlying falls below a barrier level at maturity (in which case the investor receives shares rather than cash). Higher yield reflects higher capital risk.
Suits: Sophisticated investors with a neutral-to-positive view on the underlying seeking enhanced income.
Loan Notes
Fixed-term debt instruments issued by companies seeking capital. Pay a fixed coupon (typically 8–12% p.a.) for a defined term (12–36 months). Security may be provided via a fixed and floating charge, debenture, or personal guarantee. Not exchange-listed.
Suits: Investors seeking fixed contractual income with defined maturity, comfortable with corporate credit risk.
Structured Deposits
Bank deposits with a structured return linked to an index or formula. Capital is fully protected (backed by the deposit-taking institution). Returns may be lower than notes in exchange for the stronger capital guarantee.
Suits: Conservative investors wanting market-linked potential with no capital risk.
Bespoke Structures
For larger investment amounts, we can source bespoke structured notes tailored to specific requirements — particular indices, barrier levels, currencies, terms, or coupon frequencies — from investment-grade issuers.
Suits: HNW investors with specific risk/return requirements and longer investment horizons.
Deep dive
Autocall Notes: How the Mechanics Work
Autocall notes are the most widely placed structured product for private investors. Understanding the three key structural elements — barriers, observation dates, and coupon memory — is essential to evaluating any autocall note.
Barrier Levels
A barrier is expressed as a percentage of the initial index level — typically 50%, 60%, or 70%. The barrier determines the capital protection condition: if the underlying index is above the barrier at maturity, the investor receives capital in full. If the index breaches the barrier at maturity (i.e. has fallen more than 30–50%), capital is reduced proportionally.
Some notes use a "European" barrier (checked only at maturity), others an "American" barrier (checked daily throughout the term). European barriers are materially more protective — a daily-check barrier has a significantly higher probability of being breached in volatile markets.
Observation Dates & Early Redemption
Autocalls have defined observation dates — typically annual — on which the issuer checks whether the underlying index is at or above its initial level. If it is, the note is redeemed at par (full capital returned) plus the accumulated coupon for that year.
This early redemption feature is the "autocall" — the note calls itself. Investors should model scenarios where the note is called early (year 1 or 2), as well as scenarios where it runs to full maturity. The maximum term is set at inception; if no observation date triggers, the note matures at the scheduled end date.
Coupon Memory Feature
Some autocall notes include a coupon memory (or accrual) feature. If the index is above the coupon barrier but below the autocall trigger on an observation date, no coupon is paid but the coupon is "remembered". On the next observation date where the coupon condition is met, all accumulated coupons are paid together. This feature significantly enhances the income potential of notes where the underlying spends periods below the trigger level — common in volatile market environments. A note with a 10.5% annual coupon and memory could pay 31.5% in year 3 if year 1 and year 2 coupons were deferred.
Capital first
Capital Protected Notes: Structure and Considerations
A capital protected note (CPN) guarantees the return of 100% of invested capital at maturity, regardless of the performance of the underlying index. In addition, it provides a participation rate in the upside of the underlying — for example, 80% of the rise in the MSCI World Index over 5 years, with full capital protection if the index falls.
CPNs are typically issued by investment-grade banks — major European institutions including BNP Paribas, Société Générale, Barclays, and similar counterparties. The capital guarantee is a contractual obligation of the issuer, backed by their balance sheet. FSCS protection may apply to eligible UK investors (up to £85,000 per institution).
The key counterparty risk: the guarantee is only as strong as the issuer. A bank failure would put both capital and return at risk. This risk is generally considered low for investment-grade issuers but should be understood and diversified appropriately.
Opportunity Cost Consideration
Capital protection has a cost: the participation rate in the upside is typically less than 100%. Over a 5-year term, the opportunity cost versus a direct index investment must be weighed against the value of the downside protection.
In higher interest rate environments, the cost of building the protection element is lower, allowing higher participation rates. In low-rate environments, participation rates fall significantly. As of 2026, with rates elevated relative to the 2010s, CPNs represent better value than they did in the low-rate era.
- Typical terms: 3–6 years
- Participation rate: 70–110% of index rise (varies by term and issuer)
- Capital guarantee: 100% at maturity
- Minimum investment: typically USD/GBP 10,000–25,000
Fixed return
Loan Notes: Corporate Lending for Private Investors
A loan note is a fixed-term debt instrument issued by a company to private investors. The investor lends capital to the issuing company for a defined term — typically 12 to 36 months — in exchange for a fixed interest coupon, typically 8–12% per annum. At maturity, the capital is repaid in full (subject to the financial health of the issuer).
Loan notes are not exchange-listed. They are private credit instruments, typically issued by SMEs, property developers, or growth companies seeking working capital or acquisition finance outside the mainstream banking market. As such, they carry significantly higher credit risk than bank deposits or investment-grade bonds — the higher coupon is compensation for this risk.
Security Structures
Better-structured loan notes include security arrangements that give investors recourse if the issuer defaults:
- Fixed charge: a legal claim over a specific asset (e.g. a property or piece of equipment)
- Floating charge: a claim over the general assets of the company as they change over time
- Debenture: a composite security instrument combining fixed and floating charges over all company assets
- Personal guarantee: the director or promoter guarantees the note from personal assets
- Unsecured: no specific security — highest risk, typically highest coupon
Security is only as valuable as the underlying asset and the enforceability of the charge. Independent legal review of security documentation is strongly recommended.
Applications
Six Reasons to Consider Structured Notes
Capital Preservation with Yield
Earn a conditional return above cash rates while protecting capital through the barrier mechanism — suitable where capital preservation is the primary objective.
Income Generation
Notes with memory coupon features accumulate unpaid coupons and pay them when conditions are next met — effective for generating periodic income from an equity-linked position.
Diversification from Equities
Structured notes provide conditional equity-linked returns but with a defined barrier floor — reducing the direct drawdown exposure of a pure equity portfolio in volatile markets.
Short-Term Liquidity Parking
Fixed-term loan notes and deposits with defined maturities allow capital to be deployed productively for 12–36 months while a longer-term strategy is developed.
Portfolio Satellite Position
A 10–20% allocation to structured products within a diversified portfolio adds a defined return profile distinct from both bonds and equities — reducing overall correlation.
Inflation Beating Without Equity Risk
Capital protected notes with upside participation allow investors to target returns above inflation without the unlimited downside of direct equity exposure.
Risk awareness
Key Risks to Understand
Structured notes carry risks that are different in character from conventional equities and bonds. These risks must be understood before investing.
Counterparty Risk
The return of capital and any return is contingent on the financial health of the note issuer. If the issuing bank or company fails, the note may default irrespective of the performance of the underlying. Always assess issuer credit quality.
Liquidity Constraints
Most structured notes cannot be readily sold before maturity. Secondary market pricing is typically unfavourable. Investors should treat committed capital as illiquid for the full term of the note.
Complexity and Transparency
Structured products combine derivatives, bonds, and conditional payoff schedules in a single instrument. The interaction between barrier levels, observation dates, and coupon mechanics requires careful analysis. Independent advice is strongly recommended before investing.
Frequently Asked Questions
What is an autocall structured note?
An autocall (or autocallable) note is a structured investment linked to one or more underlying indices or shares. On predefined observation dates — typically annual — the note is redeemed early ("autocalled") if the underlying is at or above its initial level, returning capital plus a conditional coupon. If the underlying falls, the note continues to the next observation date. Capital protection applies at maturity provided the index has not breached a defined barrier level (typically 50–70% of the initial level). This structure suits investors who want equity-linked returns with defined downside protection.
What is counterparty risk in structured products?
Structured notes are obligations of the issuing bank or financial institution. If the issuer becomes insolvent, your capital and any accrued return may be at risk — regardless of the performance of the underlying index. This is counterparty risk. It is managed by selecting well-capitalised, investment-grade issuers (typically major European or US banks), by not over-concentrating exposure to a single issuer, and by considering FSCS protection where available (currently £85,000 per eligible institution for UK-regulated products).
Are structured notes liquid?
Most structured notes are not freely tradeable instruments. They are designed to be held to maturity or to the autocall date. Some issuers provide a secondary market with periodic bid prices, but the spread can be significant and prices may be unfavourable prior to maturity. Loan notes issued by smaller companies may have no secondary market at all. Structured notes should be treated as illiquid and committed capital — they are not suitable for funds that may need to be accessed at short notice.
What is the minimum investment for structured notes?
Minimum investment amounts vary by product and issuer. Retail structured notes (issued via platforms or advisory firms) typically have minimums of £10,000–£25,000. Professional and sophisticated investor notes may have minimums of $50,000–$250,000. Loan notes issued by smaller companies vary widely. Global Investments sources structured products across multiple issuers and can access institutional-grade pricing at appropriate scale.
Access structured investment opportunities
We source and advise on structured notes, autocalls, capital protected products, and loan notes across the international market. Speak to an adviser to discuss which product structure suits your investment objectives and risk profile.
Structured products are complex instruments. Returns quoted are illustrative and conditional — actual returns depend on the performance of the underlying and the financial health of the issuer. Capital is at risk. Not suitable for all investors. Independent advice should be sought.
Speak to a structured products adviser
We source autocall notes, capital protected notes, and loan notes across a range of issuers. Tell us your investment amount and objectives and we will identify suitable products.