Smart-Entry Notes 101

Smart-entry Notes 101

When equities are looking expensive, many investors turn to bonds or cash, favouring the certainty of income, but at the cost of equity returns. “Smart-Entry Notes bridge this duality, providing enhanced income, whilst providing investors the opportunity to enter the market at a discount if a sell-off occurs.”

The rise of Smart-Entry Notes

In today's complex financial landscape, finding the right investment mix can feel akin to wandering through a maze. The concept of Smart-Entry Notes is a strategic evolution designed to cater to the sophisticated investor looking for more than just the traditional binary choice between equities and fixed incomes.

By offering a unique blend of market-entry optimization and defined income, these notes illuminate a path forward that doesn't compromise on security or potential gains, offering a sweet-spot between risk and reward. Getting familiar with Smart-Entry Notes might just be the key to more informed investment decisions.

So, what is a Smart-Entry note?

A Smart-Entry Note is a type of investment strategy that is designed to enter the market at a desired level below current market prices - whilst generating a defined level of income, via regular coupon payments.

What are the benefits?

1. Choice of Assets: Investors can choose the assets they would like exposure to, typically a single or worst-off basket of market-linked assets (i.e. stocks or ETFs).

2. Optimising Market Entry: The Note is designed to buy into the market at a desired ‘smart-entry level’ set by the investor. This reduces downside risks in a market sell-off.

3. Defined Income: These notes provide a regular fixed income payment, which compensates the investor until maturity.1 

4. Downside Protection: If the asset hasn’t fallen to the smart-entry level, the investor’s capital is protected.

5. Customisation Features: Investment strategy can have features like worst-off baskets, average baskets, early maturity options, and conditional coupon barriers. Adding these features can add risk for enhanced yield or increase certainty by reducing risk.

What are the risks1?

1. Market Risk: The product may at any time be subject to significant price movement which may in certain cases lead to significant losses, the investors entire capital is at risk.

2. Liquidity Risk: The product has a materially relevant liquidity risk. Certain exceptional market circumstances may also have a negative effect on the liquidity of the product.

3. Credit Risk: Investors take a credit risk on the Issuer. Thus, the issuer insolvency may result in the partial or total loss of the invested amount. 

Have an idea? Let us know here!

If this concept interests you, click on this link to talk to someone from the team and see what we can price for you.

How can I find out more? 

Should you have any questions or to speak to us about how we can help please contact us at team@stropro.com

This education series provides general information only and is not intended to provide financial advice.

Important Notes

1. The above summary is not a definitive list of risks - please refer to term sheet for a full description of risks: In addition to the below risks, various factors may impact on the potential return of the product. Some of these risks are Credit risk, Recourse limited to the Guarantor and ADI status, Market Risk, Liquidity Risk, Events affecting the underlying instrument(s) or hedging transactions, Secondary Market Risk, Currency Exchange Risk, Settlement risk, Conflicts of Interest, Risk relating to unfavourable market conditions, Distributor’s Undertaking, and Information when products do not offer full principal repayment at maturity] and have been identified from the Issuer. For further information please refer to the term sheet provided alongside this presentation or on the Stropro platform.