INDEX TREASURY NOTES

Index Treasury Notes (ITNs) are an innovative investment approach that allows investors to define the exact exposure they desire on a variety of underlying assets. ITNs allow investors to increase the probability of achieving their return targets by defining their risk today for tomorrow.

Traditionally, ITNs are offered to investors via ETFs, securitized structured products, or annuities. IPS Index Treasury Notes can be built directly in a separately managed account using exchange traded options and debt instruments, offering a highly customizable and liquid solution for financial advisors and high net worth individuals at a fraction of the cost.

Despite the flexibility provided by exchange traded options, almost every defined outcome product on the marketplace focuses on some form of asymmetric long equity exposure. IPS is the first to provide ITNs that are designed to generate income in range bound markets and provide a downside hedge in bear markets. No matter your view, IPS ITNs have you covered.

Highlighted Note

Types of Notes:

Buffered + Uncapped

Buffered + Capped

Buffered + Enhanced

Provides investors with uncapped upside exposure to the underlying asset with a defined downside buffer

Provides investors with capped upside exposure to the underlying asset with a defined downside buffer

Provides investors with enhanced upside exposure to the underlying asset up to a cap with a defined downside buffer

The Buffered + Uncapped note provides participation in the upside of the underlying asset with no upside cap. Generally, the participation rate is between 65-75% of the performance of the underlying asset over the outcome period. The downside is buffered meaning that the structure does not participate in the downside unless the underlying asset is below the buffer level at the end of the outcome period.

Characteristics:

  • Directional Bias: Bullish
  • Upside: Uncapped
  • Downside: Buffered
  • Upside Participation: 65-75%
  • Downside Participation Below Buffer: 100%

The Buffered + Capped note provides participation in the upside of the underlying asset up to a designated cap. Generally, the participation rate up to the cap is 100% of the underlying gain over the outcome period. The downside is buffered meaning the note does not participate in the downside unless the underlying asset is below the buffer level at the end of the outcome period.

Characteristics:

  • Directional Bias: Bullish
  • Upside: Capped
  • Downside: Buffered
  • Upside Participation: 100% (up to cap)
  • Downside Participation Below Buffer: 100%

The Buffered + Enhanced note provides enhanced participation in the upside of the underlying asset up to a designated cap. Generally, the enhanced upside participation rate if between 150-200% of the underlying gain over the outcome period. The downside is buffered meaning the note does not participate in the downside unless the underlying asset is below the buffer level at the end of the outcome period.

Characteristics:

  • Directional Bias: Bullish
  • Upside: Enhanced + Capped
  • Downside: Buffered
  • Upside Participation: 150-200% (up to cap)
  • Downside Participation Below Buffer: 100%

Fully Protected

Defined Income

Defined Hedge

Provides investors with capped upside exposure to the underlying asset with a defined “floor”

Provides investors with enhanced income if the underlying asset remains range bound over the outcome period

Provides investors with a hedge against the underlying asset. The hedge is capped at a defined level on the downside and designed to have zero cost if the underlying asset increases in price

The Floored note provides participation in the upside of the underlying asset up to a designated cap. Generally, the upside participation rate is 100% of the underlying gain over the outcome period. The downside is “floored” meaning that the note will not participate in any of the downside of the underlying asset.

Characteristics:

  • Directional Bias: Bullish
  • Upside: Capped
  • Downside: Floored
  • Upside Participation: 100% (up to cap)
  • Downside Participation: None

The Defined Income note provides enhanced income meant to take advantage of range bound market environments. If the underlying asset remains within the “outcome range” over the outcome period, the note achieves maximum profitability. If the underlying asset finishes outside of the outcome range, the note is generally designed to return the full principal invested.

Characteristics:

  • Directional Bias: Neutral
  • Downside: Defined
  • Outcome Range: A defined range in underlying where structure achieves max profitability
  • Buffer Zone: A small range where note fails to achieve max profitability but does not return zero

The Defined Hedge note provides a defined payout intended to benefit from market declines. The Defined Hedge note generally aims to capture between 100%-200% of the downside in the underlying asset up to a defined cap. Should the market decline further than the amount of the downside cap, the note will attain is maximum profitability. The Defined Hedge note is generally designed to offer zero carry cost if the underlying asset is flat to up over the outcome period.

Characteristics:

  • Directional Bias: Bearish
  • Downside Participation: 100-200% (up to cap)
  • Cost of Carry: Zero

Disclaimer

Any information contained within this webpage is intended to be educational and illustrative in nature. Any examples of Defined Outcome Investments are purely hypothetical and should not be misconstrued as an offer to buy or solicitation to sell any financial securities. Any information, illustrations or data contained within this webpage is strictly for informational and educational purposes and is prepared for institution investors or other financial professionals. As with any investment, past performance is not necessarily indicative of future investment results, and one should always consult an investment professional before making any investment decisions.

Any performance figures in this webpage are calculated by IPS Strategic Capital (IPS). While best efforts are made when calculating these metrics, IPS cannot guarantee the accuracy of any figures shown throughout the presentation. The payoff profiles of any defined outcome investments, while hypothetical in nature, do not include the observation of any management fees.

Defined Outcome Investments utilize exchange traded options contracts. Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options. Put options give the purchaser the right, not the obligation, to sell a specified number of shares of the underlying security at a specified date in the future. The seller of a put option has the obligation, not the right, to have a number of shares delivered to them at a specified price at a specified date in the future in exchange for receiving premium upfront for this risk. The buyer of a call option has the right, not the obligation, to purchase shares of the underlying security at a specific date in the future. The seller of a call option has the obligation, not the right, to deliver shares of the underlying at a specific date in the future.

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