As the market anticipates the peak of the rate cycle and the potential for rate cuts, there is a growing appetite among investors seeking to time the peak in yields in a cost-effective manner. This was a trend spotted by The Asset team while analyzing structured investment solutions that stood out in the market as part of The Asset Triple A Private Capital Awards 2024.

BNP Paribas Wealth Management offers the “Bullish Sharkfin Note Linked to TLT UQ”, an investment solution designed to add duration while limiting downside risks. This principal-protected strategy offers a level of security that is particularly appealing to investors with a strong bullish conviction regarding expected rate cuts, allowing them to benefit from TLT's upside with peace of mind. The note is linked to TLT (iShares 20+ Year Treasury Bond ETF), which captures the long end of the treasury curve and is highly sensitive to long-term interest rate movements. By positioning to extend duration as rates begin to decline, investors can capture the sizable upside of TLT.

A Sharkfin note is a structured product that is linked to the performance of an underlying asset with a payoff structure that resembles the shape of a shark’s fin.

In the best-case scenario, the note offers a wide sharfin range to capture TLT’s upside in the event of a rate cut, potentially generating double-digit returns if the price of TLT finishes within the designated range.

In the worst-case scenario where a knock-out barrier is breached, investors are still able to redeem their full principal investment with an assured coupon at maturity, which is called a knock-out rebate.

The growing interest in structured investment solutions, such as the Bullish Sharkfin Note, reflects investors' desire for strategies that provide both principal protection and the potential for attractive returns. As the market evolves and expectations around interest rates shift, products that combine security with opportunities for significant upside will likely continue to gain traction.

BNP Paribas Wealth Management’s offering not only meets this demand but also empowers investors to navigate the complexities of the current economic landscape with confidence. This commitment to excellence is exemplified by the “Bullish Sharkfin Note Linked to TLT UQ”, which won as the Best Structured Investment and Financing Solution at The Asset Triple A Private Capital Awards 2024.

This article is the latest edition of our Nuts & Bolts series that looks into the nitty-gritty of some of the sophisticated investment products and capital markets deals in Asia. For the previous article in this series, please click here.