Types of Structured Notes Purchased in 2023

In 2023, we didn’t see much of a change in the types of structures advisors were purchasing.

Income Notes remain a portfolio staple given their yield enhancement potential.

Growth Notes interestingly, had renewed interest in 2023 with interest rates now higher, and likely higher for longer.

Digital Notes saw a slight uptick in interest year over year, while Absolute Note sales were flat.

Most Commonly Used Principal Protection Types in 2023

In 2023, soft (barrier) protection was the most common principal protection used. With markets trending higher throughout the year, this comes as no surprise. During risk-off scenarios, we generally see an uptick in demand for more conservative, hard protection.

Top Five Principal Protection Levels Used in 2023

Selecting an appropriate principal protection level is always tricky. In 2023, 30% principal protection was once again the most common level selected. This was a surprising 68% increase in the same level of protection that was used in 2022.

100% or full principal protection usage doubled year over year. This is inline with what we’re hearing on the street. Seemingly, investors after having been stung by down markets in 2022, weren’t leaving things to chance and demand for principal protected investments came roaring back in 2023.

Top Five Note Durations Used in 2023

Consistent with market wisdom, demand for Note tenors in the 2-3 year range made up a bulk of purchases in 2023. We did notice demand for Notes with 60-month maturities increased 17% year over year. Seemingly, the appetite for longer-dated paper matched the market’s positive sentiment throughout 2023. 

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