5 smart things to know about Equity Linked Structured Note
Posted by: Labdhi Mehta on Jan 16, 2017, 06.30 AM IST
1. An ELN is a debt instrument whose return is determined by the performance of the underlying equity.
2. The underlying equity can be a single equity security, a basket of equity securities, or an equity index.
3 .A typical ELN is principal protected so that at maturity the investor is guaranteed to receive the original amount invested.
4 .The final payout is the amount invested plus a percentage of the gain in the underlying equity. The percentage is pre-decided and note specific and is called Participation Rate which can be either more than 100% or less.
5. Most ELNs are not actively traded on the secondary market and are designed to be held till maturity.