Integras Partners has been custom-designing Structured Notes since early in the market declines of 2020.
On November 25th, our largest note was recently redeemed, returning 100% of invested capital along with a 10.25% annual yield for eighteen months. Comparatively, investment-grade corporate bonds have declined by nearly 15% over this period.
Structured Note yields and values are tied to the price movement of a basket of underlying securities or market indexes. The investment bank issuing the note trades options on this basket of securities to generate the yield. Integras Partners has to date originated nine custom notes, each tied to a chosen small group of individual stocks. The one that just returned principal was based on the price movements of Bristol-Myers Squib (BMY), Proctor & Gamble (PG) and U.S. Steel (X).
This note was originated May 25, 2021, with a three-year maturity. Over the next 18 months (because none of these stocks was down more than 40%) owners received monthly dividends totaling $153.75 (10.25% annually) for each $1,000 invested. After one year, if all the stocks were above the May 2021 price, the note could be called (redeemed with full return of capital), which is what happened.
Integras Partners is an independent Registered Investment Advisor (RIA), managing close to $180 Million of client assets. This independence, and their average of $3.6 million in note originations enables the firm to customize the notes that have bolstered their client accounts during this recent period of tumultuous market declines. It is only in volatile markets like we’ve had since 2020, that Integras can employ this strategy to generate attractive rates of interest with a high probability of return of capital.