- 24Jun2025
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MD John Beverley’s personal strategy – A Balanced Attitude
Written by John Beverley
At NEBA Financial Solutions, we specialise in building practical, transparent investments for international advisers and their clients. A core strategy we advocate for involves indexed structured products based on major global market indices such as the S&P 500, FTSE 100, and EuroStoxx 50.
These indices are known for their long-term resilience and relatively quick recovery following market downturns—making them ideal foundations for structured notes. Unlike volatile markets like Brazil or India, these major indices provide the stability and predictability required for effective long-term planning.
Two Smart Structures – Different Strengths
We focus on two specific types of indexed structured products, both of which serve distinct client needs depending on income preferences and investment timelines.
1. High Coupon Trigger Notes (100%)
These structured notes only pay a coupon when the indices are at or above their initial level on a given observation date.
Key Features:
Coupon Trigger: 100% of the initial index level
Capital Protection: Typically protected unless the index falls below a barrier (e.g. 60%) at maturity
Returns: High coupons, but less frequent payments
Income Timing: May not pay anything during early years if indices underperform
Use Case: For clients comfortable waiting for the market to recover in exchange for a larger payout
2. Low Coupon Trigger Notes (e.g. 85%)
These pay regular income as long as the indices remain above 85% of their starting level—even if the market has fallen.
Key Features:
Coupon Trigger: 85% of the initial index level
Capital Protection: Same as above (usually at maturity)
Returns: Lower coupons, but more consistent income
Income Timing: Pays regularly unless there’s a significant market drop
Use Case: Ideal for clients needing steady income and a buffer against mild volatility
What They Have in Common
Both types of notes often include:
Major Index Exposure (S&P 500, FTSE 100, EuroStoxx 50)
Capital protection barriers at maturity (commonly around 60–70%)
Auto-call features, allowing the note to mature early when certain performance conditions are met
Why I’d Use Both?
As a balanced investor myself, I find the combination of both note types delivers the best of both worlds:
50% in Low Coupon Trigger Notes:
Provides steady income
Helps cover platform charges, advice fees so more of your money can stay invested
50% in High Coupon Trigger Notes:
Targets higher long-term return
Allows for upside capture once the markets recover
By using both structures, advisers can help clients:
Receive predictable cash flow
Access enhanced total returns
Maintain capital risk within acceptable levels
Who Is This Strategy Suitable For?
This balanced approach works well for:
Advisers managing client portfolios in uncertain markets
Balanced and conservative investors seeking alternatives to bonds or funds
Clients needing regular income from their portfolio
Investors looking to add defined return strategies to their holdings
Final Thoughts
Indexed structured products are not all created equal, but when built on strong indices and structured with care, they can form a valuable core or satellite investment in any client’s portfolio.
By combining high and low coupon triggers, advisers can offer clients both consistency and growth—without stepping outside acceptable risk boundaries.
- 24 Jun, 2025
- NebaStructuringTeam
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