Are you happy with your 5% annual returns? Tired of sacrificing possible returns in the name of security? Can you afford another economic downturn? Afraid to tie your money up for the long-term? You’re not the only one.
Imagine how it would feel knowing that your wealth is growing, but your capital is always safe. No more sleepless nights worrying about market drops. It’s time to make your money work harder, without fear of losing it.
Our strategies are designed to be simple and transparent. Through our streamlined process, you can create the right investment for you and your goals. No one-size-fits-all options, no complicated bundled products and no hidden restrictions or fees. You as the investor will drive the decisions every step of the way with our 3-step approach.
It’s a strategy designed to give you peace of mind while helping you grow your wealth. More importantly, it’s a strategy driven by your needs to offer risk managed investment options that don’t force you to settle for less.
Thanks to an approach that links your investment to top-performing indices like the S&P 500 or any major stocks at a risk level you select, you benefit from market growth, all while knowing your initial capital is as protected as you want it to be. So, when the market dips, you won’t lose a penny of what you’ve invested.
You can invest without the strings attached and maintain flexibility in your investment approach. Unlike similar offerings, this strategy comes featuring a host of benefits that are essential in the modern economic climate:
1. Full control over your investments, so you can choose where and how to invest your money, unlike other risk managed investments out there.
2. 100% transparency with no hidden fees, rules or requirements. That way, you always know exactly what you’re paying for at all times.
3. Daily liquidity, with access to your funds anytime, without penalties. This ensures you can access your money whenever you choose.
4. Smart multiplier so returns are not limited just to a fixed amount, leaving the potential to continue earning returns until maturity.
For too long, retirement saving strategies have been generic and curated to the lowest common denominator. In the modern economic landscape, it is quickly becoming necessary to adapt and personalize strategies to meet the specific needs of investors.
With principal protection, you determine the level of risk you want to take. You pick the investment. You choose your own timeline. Meanwhile, our team actively manages the strategy along with you. All to maximize returns and seize opportunities that arise. As a result, you gain peace of mind and reap the reward of the key benefits of principal protection, allowing you to:
Interested in seeing how a principal protection strategy might work in real life? Check out how a few different scenarios could be a fit for a principal protection strategy. You’ll’ learn:
Want to keep it simple? Invest your money in the S&P 500 Index as a whole. This strategy will offer up to 100% protection for your initial investment, while investing in the SPDR S&P 500 ETF Trust (SPY). It offers exposure to the market for you, while maintaining the biggest key benefits of any principal protection strategy.
If you want to invest in certain stocks or sectors, you can build your custom principal protection strategy at any time, with any stock. For example:
If you are interested in taking on a little more risk, you can also opt for up to 94% protection instead of up to 100% protection. As a result, you can earn higher returns with the increased downside risk. For example:
No, the Confluent Principal Protection Strategy is not an insurance product. It is not insured by the financial strength or guarantees of any insurance company or bank. This implies no credit risk exposure to such institutions. The options within the strategy are guaranteed for settlement by the Options Clearing Corporation (OCC), a highly regulated entity responsible for the clearings and settlement of option contracts.
No, the Confluent Principal Protection Strategy is not an annuity. Whereas annuity products are an insurance underwritten by issuing institutions, this strategy does not depend on any such insurance. The options in the strategy are guaranteed for settlement with the Options Clearing Corporation (OCC), further adding to the openness and reliability of the strategy.
No, this is not an ETF. It’s a fully customizable investment solution whereby investors can define parameters such as:
It does this through a Separately Managed Account (SMA), ensuring the strategy is executed in a highly transparent and liquid manner within the investors’-controlled environment
This strategy is ideal for investors who value customization, transparency, and downside protection while seeking equity market growth. Potential investors include:
By tailoring investment parameters, this strategy can cater to a broad range of financial goals.
Yes, it could be strong compared to the traditional 60/40 equity/bond portfolio, whereby the bond component has principal protection, and the equity component seeks growth. The approach can also be applied to a 60/40 portfolio when one seeks higher returns with protection of one’s principal and needs to swap out part of the bond position. It could also be a suitable alternative for high-yield cash alternatives such as money market funds and CDs among others.
No, there’s no assurance that you won’t lose anything. The approach is not supported by the financial assurances of a bank or insurance firm, despite its goal of offering downside protection. Nonetheless, the OCC guarantees the settlement of options used in the approach. In the unusual event that the OCC becomes insolvent or is unable to fulfill its commitments, any loss could result. The OCC’s classification as a Systemically Important Financial Market Utility guarantees more stringent regulation to reduce these risks.
Yes, there are similar products, such as structured notes and some insurance products. However, the Confluent Principal Protection Strategy is designed to overcome some of the weaknesses in these products, including:
It offers a low-cost and transparent solution via a Separately Managed Account-SMA-that provides better flexibility and control for the investor.
Reference Asset Exposure: The asset, such as S&P 500, which the strategy is tracking against for performance.
Cap: The maximum return the strategy can realize during the outcome period, excluding fees. Example: A strategy tracking the S&P 500 with a cap of 10% does not include returns above 10%.
Buffer (Downside Protection): The amount of protection the strategy provides against losses, pre-fees, over the outcome period.
Outcome Period: The period over which the strategy will provide its predefined outcomes, whether it be a cap on returns or protection against losses.
No, the cap is dependent on the performance of the underlying reference asset. This will reach the cap only if the return of the reference asset meets or exceeds the cap during the outcome period.
The performance of the strategy depends on the movement of the reference asset and is achieved by the interaction of options and the underlying. The following scenarios are possible returns:
At any point during the Outcome Period:
At Maturity:
Not necessarily. The Confluent Principal Protection Strategy has unique features that may not align with every investor’s goal or risk tolerance. For more details on whether this strategy is right for you, we recommend speaking with one of our expert advisors to review your specific needs and circumstances.
To read all relevant disclosure info and risk considerations, click below:
The information provided above is for illustration purposes only and does not constitute investment advice or a recommendation. Each client has unique financial needs, objectives, and circumstances; therefore, results will differ for each individual. The data presented is as of October 1st, 2024, and the investment horizon for this strategy is 1 year, with the options expiration date being September 30th, 2025.
The strategy involves the use of options and fixed-income securities, with the Money Market yield being 4.5% and the one-year STRIPS priced at 96.2% as of October 1st, 2024. All returns and credits described in the case study are based on the completion of the full investment term. Early termination or liquidation of the strategy may result in unexpected outcomes, including a potential negative return or partial loss of the principal.
The underlying index used for this strategy is SPDR® S&P 500® ETF (SPY) to represent S&P 500 Index returns. However, the results of this strategy may vary due to the rounding of shares and contracts for trading purposes.
It is important to note that investment in this strategy does not guarantee specific returns, and past performance is not indicative of future results. Any discrepancies in returns may arise from rounding errors or other factors.
Confluent Asset Management is not responsible for any decisions made based on the information provided in this illustration, and no liability is assumed for any actions taken by clients based on this example. Please consult with a professional financial advisor to determine the suitability of this strategy for your specific financial situation.
All returns are shown after deducting fees. This illustration assumes an annual fee of 1%.
*This case study is for illustrative purposes only and is not a guarantee of future performance. All returns are net of assumed management fees of 1.5% and based on current market conditions as of the pricing date. Expected returns and principal protection levels are subject to change based on market fluctuations, available option strike prices, and management fees. Principal protection levels are up to 100% for SPY and NVDA, and 93.5% for TSLA; actual protection levels may vary. Dividend yields assumed are 1.3% for SPY, 0.54% for NVDA, and 0% for TSLA. Money market rate at the time of pricing is 4.25%. Data is as of 11/22/2024. All information provided is believed to be accurate but is subject to change. The expiry date for the strategy is December 19, 2025. Please review all offering documents and disclosures before proceeding with this investment.
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