What’s Ahead
- Market swings driven by inflation, interest rate uncertainty, and geopolitical risks have made risk-managed investment strategies essential in 2025.
- Investment strategies that use different Structured Notes can help investors meet specific goals while still managing risk.
- Analysts expect stock market volatility to persist. Below are three ways to keep your portfolios protected in a variety of market conditions.
The financial markets in early 2025 continue to grapple with heightened volatility and the threat of a looming recession. Persistent inflation concerns, fluctuating interest rates, and geopolitical uncertainties have led to sharp swings across markets.
The Federal Reserve (Fed) remains in a delicate balancing act, managing interest rate policies amid mixed economic data. Meanwhile, corporate earnings have seen increased dispersion across sectors. Against this backdrop, investors are seeking strategies that turn volatility into an ally.
Structured Notes can serve as valuable tools to manage risk while still offering attractive return potential. Below, I explain the three Structured Note strategies that are especially useful in these conditions. Each offers unique benefits that can help investors navigate the latest market turbulence.
Absolute Return Notes: Navigating Uncertainty With Confidence
Investors use Absolute Return Notes to provide positive returns regardless of market direction. With equity markets experiencing large swings due to economic uncertainty and ongoing rate speculation, these Notes offer a compelling alternative to traditional investments.
Why They Work in the Current Market:
- As the S&P 500 and Nasdaq continue to show wide intraday swings, Absolute Return Notes can allow investors to generate positive returns even if markets remain range bound or volatile.
- The structured payout mechanism provides a cushion against extreme short-term fluctuations, reducing the need for precise market timing.
- With uncertainty around future Fed rate cuts, these Notes may help investors achieve more consistent performance without betting on specific macroeconomic outcomes.
Absolute Return Note Example
Absolute Return Note โข 3 Years โข SPX
150% Upside Participation,
27.50% Max Return,
20% Hard Protection
Indicative pricing as of 3/12/2025. Changes to terms and pricing should be expected.
Portfolio Placement: US Large Cap Core
Cautiously Optimistic: This Note offers a level of Hard Protection against any further pull back, while allowing investors to achieve 150% upside on the S&P 500, subject to a Max Return of 27.50%. If the Note “caps out” on the upside, that would equate to a 9.16% annualized return, higher than the historical average return of the Index.
Absolute Return: This feature can be valuable in uncertain markets. If the S&P is down 0-20% at maturity, the investor will receive the absolute return. For example, if the S&P is down 15% at maturity, the Note will be UP 15%
This offering closes March 31, 2025. To indicate interest, log on to Halo and search CUSIP: 06376DFC3
Income Notes: Generating Steady Cash Flow Amid Interest Rate Uncertainty
Income Notes offer periodic coupon payments, typically at higher rates than traditional fixed-income instruments. Given the uncertain trajectory of interest rates in 2025, Income Notes can offer reliable yield solutions with a level of downside protection against market declines.
Why They Work in the Current Market:
- Investors can lock in higher coupon payments despite rate volatility, providing a hedge against fluctuating bond yields.
- As equities face increased dispersion, with some sectors outperforming while others struggle, Income Notes can offer consistent cash flow without direct reliance on stock price appreciation.
- As volatility increases in the market, the yield on an Income Note can increase, allowing investors to capitalize on the uncertainty and generate positive returns in challenging times.
Income Note Example:
Income Note โข 2 Years โข NVDA, TSLA
40% / 40% Soft Protections
27.75% per annum yield
6mo Non-Call, Monthly Call thereafter
Indicative pricing as of 3/12/2025. Changes to terms and pricing should be expected.
Portfolio Placement: US Large Cap Growth
Pullback Opportunity: With TSLA now off 50% and NVDA off 30% from its 52 week highs, these stocks could be approaching a bottoming process. The high coupon and relatively deep protections on this Note can be a good way to capitalize on recent volatility.
Income Opportunity: An Income Note can be a great way to generate an attractive yield on two stocks that pay little to no yield if you own them long. Consider pairing this with a Growth Note on these names to receive enhanced upside and a “synthetic dividend creation” on these stocks. This strategy can work well if you are bullish on the basket longer term.
This offering closes March 18, 2025. To indicate interest, log on to Halo and search CUSIP: 05554TZ24
Bearish Sharkfin Notes: Take Advantage of Market Downturns
Recent volatility has taken a hit on the Magnificent Seven stocks. Additionally, geopolitical risks and potential supply-chain disruptions have weighed on investor sentiment. As opposed to shorting a stock, Bearish Sharkfin Notes present a potentially attractive strategy for those expecting market pullbacks.
Why They Work in the Current Market:
- With recession fears lingering and key economic indicators showing mixed signals, investors can use Bearish Sharkfin Notes to profit from potential downside moves.
- These notes allow investors to hedge against long equity exposure while avoiding the full cost of put options.
- Given the high implied volatility in certain sectors, these structures can provide asymmetric return opportunities if the market declines within a defined range.
The Bottom Line: The Right Tools for Volatile Times
Structured Notes remain a powerful tool in 2025 as investors navigate economic uncertainty, market volatility, and evolving interest rate policies. Investors can use Absolute Return Notes to help mitigate directional risk. Income Notes can provide reliable cash flow in a fluctuating rate environment. And finally, Bearish Sharkfin Notes can allow investors to capitalize on downside movements.
With markets likely to remain shaky in the months ahead, Structured Notes can help advisors and investors craft customized investment strategies that align with their goals.
About the author
Jason Barsema
Halo Investing
Jason Barsema is the Co-Founder and President of Halo Investing where he leads the team and product vision. With over a decade of experience managing Structured Notes, he built the Halo platform to provide all investors access to this incredible investment product. Jason previously was a Partner on a large Private Banking team at Credit Suisse, where he managed portfolios for Ultra High Net Worth Individuals & Institutions. Jason has his B.A. in Economics from Northern Illinois University and his M.B.A. from the Kellogg School of Management at Northwestern University.
Please see our Halo Disclosure Page for important disclosures.
An investment in Structured Notes may not be suitable for all investors. These investments involve substantial risks. The appropriateness of a particular investment or strategy will depend on an investorโs individual circumstances and objectives.
Content and any tools discussed are provided for educational and information purposes only. Halo Investing makes no investment recommendations and does not provide financial, tax, or legal advice. Any structured product or financial security discussed is for illustrative purposes only and are not intended to portray a recommendation to buy or sell a particular product or service.
US337/1.1/2503
