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💡 Principal Protected Notes are well-documented and arguably one of the most popular structured products in traditional finance.
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What is a Principal Protected Note (PPN)?
- It is a type of structured product.
- It is typically constructed using bonds and long call options, giving the note holder upside capture of an underlying asset index while protecting them on the downside.
- PPNs are typically issued by banks.
What are PPNs issued by Fig Investments?
- Fig Investments issues Principal Hedged (Protected) Notes.
- It is an innovative take on PPNs in that customers may specify a level of principal protection that they desire, ranging from 70% - 100%.
- The underlying product construction logic is the same as PPNs.
Example:
A principal hedged note issued by Fig Investments
| Maturity Date |
March 29, 2024 |
| Type of Note |
Principal Hedged Note - Upside Capture |
| Purchase Principal |
$100,000 USD |
| Participation Rate |
13.5% |
| Underlying Asset Index |
Bitcoin Index |
| Maximum Payout |
$104,860 |
| Minimum Payout |
$100,058 |
| Quoted Specifications |
Net of All Fees |
| Indicative Spread Fee |
$531.03 |
Fig Investments Product Construction Illustration
- For each note, we show the customer how the principal protected note is constructed.
- To construct the note in the example, one would need to buy a US tbill at the per-unit cost indicated and a call spread with strike prices of $33,000 and $45,000 on Bitcoin.
- Full transparency and education for the customer so that they feel comfortable with our process.