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Market-Linked CDs (MLCDs) are FDIC-insured certificates of deposit (CDs), whose performance is linked to the return of an underlying asset or group of assets, which may include equities, commodities, currencies, or interest rates. There are a variety of structures available, which can allow investors to potentially:

  1. Capitalize on a market view (bullish, bearish, or market neutral)

  2. Complement an investment objective (conservative, moderate, or aggressive)

  3. Mitigate risk in a portfolio

  4. Gain exposure to a specific asset class or sector

MLCDs are designed to provide investors with the ability to participate in the performance of the underlying asset or group of assets, while retaining certain characteristics of a traditional CD. When purchased at par and held to maturity, a MLCD generally provides 100% principal protection. Any potential returns are generally limited to a percentage of the underlying asset performance and may be capped.

It is important to highlight that Market-Linked CDs only guarantee principal back at maturity and thus if an investor sells or redeems their investment prior to maturity, they may receive a return of less than their original investment.

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Why Invest in Market-Linked CDs?

While Market-Linked CDs (MLCDs) may not be suitable for all investors, they can be an attractive investment choice for those looking to preserve capital and limit downside risk, without sacrificing the ability to participate in upside market movements. Young families, conservative investors, individuals saving for college, baby boomers, and retirees are examples of those who may choose to address these objectives using MLCDs. It is important that investors understand that MLCDs are intended to be held to maturity and may not be suitable for investors who may need immediate access to their principal investment.

In addition to principal protection, MLCDs offer the safety of an FDIC-insured1 CD, up to applicable FDIC limits. For investors who understand the risks associated with the individual structured CD, MLCDs can complement a balanced portfolio strategy while offering the potential to realize enhanced returns compared to traditional savings or deposit accounts.

Selected Features of Some MLCDs

  1. Market participation with no downside market risk

  2. 100% principal protection when held to maturity for amounts in excess of FDIC insurance, subject to the ability of the issuer to settle MLCDs at par value

  3. FDIC-insurance1

  4. Generally issued in $1,000 denominations

  5. Diversification

  6. Estate feature

  7. Mitigate risk in a portfolio

  8. Advisory structures available for fee-based accounts

  9. Customization options

Risk Considerations

  1. Call Risk

    Some Market-Linked CDs may also be redeemed by the issuer prior to the scheduled maturity which can adversely affect an investor’s return; an investor might be unable to reinvest the proceeds at a similar return if this occurs.

  2. Inflation risk

    Even with 100% principal protection, a Market-Linked CD’s maturity value may be less than the inflation-adjusted original investment.

  3. Issuer Default Risk

    MLCDs are unsecured obligations of the issuer and therefore subject to default risk. If the issuer defaults on its obligation, investors will receive significantly less than the principal amount of the structured investment, even if the product is principal-protected.

  4. Liquidity Risk

    Market-Linked CDs are generally not traded on any exchange, or may be only thinly traded, and can be difficult to price. Due to the lack of liquidity, the market price of MLCDs may be significantly discounted if redeemed prior to maturity. MLCDs should be considered buy-and-hold investments. The lack of a liquid secondary market for makes MLCDs inappropriate for investors who may not be able to hold them to maturity.

  5. Market Risk

    Volatility and other market forces can affect the value of the asset underlying the growth component, both during the term of the Market-Linked CD and at maturity, and this can affect return. Historical performance of the underlying asset class is no guarantee of future performance.

  6. Payout Risk

    Market-Linked CDs may pay an interest or coupon rate substantially above the prevailing market rate. MLCDs may also cap or limit upside participation in the performance of the underlying asset, particularly if the security pays an above-market rate of interest. Additionally, the underlying may under-perform which could negatively impact the payout. Other factors that may affect the investment value of a MLCD include: interest rates, volatility of the underlying asset, liquidity, and time remaining until maturity.

  7. Statement Pricing

    Monthly statement pricing may be less than the original purchase price and is subject to market conditions. Generally, the more time remaining to maturity affects the value of the underlying asset of the Structured CD. If held to maturity, investors may expect full return of capital; plus, performance, if any.

Other Considerations

  1. Capped Return

    Some MLCDs may include a capped return on the upside participation. For example, a CD may provide 1-to-1 participation in the upside appreciation of the underlying asset; however, the terms of the CD may cap the return at 20%. In this case, should the underlying asset appreciate 30% over the life of the CD, the investor would only receive a 20% return because of the cap.

  2. Diversification

    Because the performance of a MLCD can be tied to wide range of underlying assets, Market-Linked CDs can offer participation in asset classes and sectors which might be difficult to access through direct investment. For example, some MLCDs may provide market exposure to specific economic sectors, geographic regions, emerging markets, commodities, or currencies. Some may also provide exposure to asset classes with low correlation to traditional investments, offering the potential to lower overall portfolio volatility.

  3. Estate Feature

    Many Market-Linked CDs offer an estate feature. In the event of death, the estate may be entitled to receive 100% of the principal amount of the CD, before maturity. The estate feature is subject to conditions and limitations established by individual issuer, and the disclosure statement should be read carefully.

  4. Participation Rate

    Market-Linked CDs generally specify a participation rate, which is the percentage of any appreciation in the growth component included in total return. Some Market-Linked CDs offer 100% participation or more.

  5. Tax Treatment

    There are important tax considerations related to Market-Linked CDs, both during the term of the product and at maturity. Consult your tax advisor before investing in any Market-Linked CD.


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Structured Products are sold only by prospectus. Investors should read the prospectus and pricing supplement carefully before investing which contains a detailed explanation of the risks, tax treatment, and other relevant information about the investment. Investors should consult their accounting, legal, or tax advisor.

Market-Linked CDs are made available through an offering document, or disclosure statement. These documents contain a detailed explanation of the risks, tax treatment, and other relevant information about the investment. Before investing, you should read the disclosure statement and other supporting documents carefully. Additionally, investors should consult their accounting, legal or tax advisors before investing. Market-Linked CDs are sold through financial professionals.

It is important to highlight that Market-Linked CDs only guarantee principal back at maturity (subject to the credit risk of the issuer) and thus if an investor sells or redeems his/her investment prior to maturity, the investor may receive an amount less than his/her original investment. There may be substantial penalties for an early withdrawal. Typically, the issuer of the MLCD maintains a secondary market; however, they are not obligated to do so.

1 The basic FDIC Deposit Insurance coverage limits are: Single Accounts (owned by one person) $250,000 per owner; Joint Accounts (two or more persons) $250,000 per co-owner; IRAs and certain other retirement accounts $250,000 per owner; and Trust Accounts $250,000 per beneficiary subject to specific limitations and requirements. These deposit insurance coverage limits refer to the total of all deposits that an account holder (or account holders) has at each FDIC-insured bank. These are the most common ownership categories that apply to individual and family deposits and assumes that all FDIC requirements are met. Additional information is also available at: