Skip to main content
There are growth opportunities in today’s markets, but with those opportunities often comes volatility. Such volatility causes many investors to stay on the sidelines for fear of loss. Growth-oriented market linked CDs (MLCDs for short) are a type of structured investment designed to offer investors a degree of market participation with some of the protective features that traditional Certificates of Deposit (CDs) are known for— including FDIC insurance* and principal protection when held to maturity.

Traditional Versus Market Linked CDs

Traditional CDs are generally considered safe and secure. This is because holders are guaranteed to get at least a return of principal at maturity, up to the applicable FDIC limits. Traditional CDs typically offer an income stream of fixed coupon payments.

Growth-oriented MLCDs also offer principal protection at maturity with FDIC insurance up to the applicable limits. Their payoff typically occurs at maturity and is tied to the return of an underlier, such as an equity index or basket of stocks or ETFs.

With MLCDs, investors gain the potential to generate a higher return on their investment at maturity if the underlier performs sufficiently well, although they also carry the risk of receiving no return if the underlier does not perform well.

How Investors Participate in the Market With a CD

There are a variety of MLCDs in the market. The payoff characteristics for each MLCD will depend on the investment term and the type of the underlier. The typical term for a MLCD is 5-10 years. An investor should be comfortable with holding the CD until maturity since liquidity is not guaranteed and losses are possible if sold prior to maturity.

While some MLCDs offer the potential for periodic income payments, the majority of MLCDs issued today provide for risk-managed growth, or the opportunity to grow assets with a single payment at maturity.

For a growth-oriented MLCD, if the underlier has risen over the term, the investor will participate in its upside at a pre-determined rate, and/or up to a stated maximum return. Even if the underlier goes down over the term of the investment, the investor ‘s principal would be returned when the CD matures, backed by FDIC insurance.

An example of a growth-oriented market linked CD can be visualized in this hypothetical illustration:

Potential Investors

Investors looking for higher return potential than the fixed yields offered by traditional CDs should consider MLCD attributes before investing, some of which include:


  • Growth: MLCDs offer the potential to provide returns in excess of fixed coupons on traditional CDs given returns are tied to the performance of an underlier. Investors may be able to participate in some or all of such potential returns, depending on the terms of the CD.
  • Capital protection: Similar to traditional CDs, MLCDs offer a full return of principal when held to maturity, backed by FDIC insurance, up to applicable limits, like corporate bonds or treasuries. This income is subject to certain contingencies and is not guaranteed.


  • Contingent upside: Positive returns are not guaranteed. If the underlier declines over the life of the investment, the MLCD will typically only return principal at maturity (unless it has a minimum return feature). Traditional CDs offer fixed coupons throughout the life of the product, regardless of market performance.
  • Statement value and liquidity: MLCDs are long- term investments designed to be held to maturity. The value of a MLCD is influenced by market factors and time remaining to maturity. Selling prior to maturity may result in a loss. Furthermore, there is no guaranteed secondary market for MLCDs. Though issuing banks have historically provided liquidity, they are under no legal obligation to do so.
  • Tax treatment: Investors should review the tax section of an investment’s offering materials and consult a tax professional concerning any applicable tax consequences of owning structured investments.

In times of market volatility, investors may be hesitant to engage in the equity markets. For those who are comfortable with a longer term buy-and-hold investment though, MLCDs can offer the opportunity to pursue equity-like returns with the peace of mind of principal protection and FDIC insurance, up to applicable limits.

*MLCDs are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to applicable limits set by federal law and regulation. An investor would receive at least the deposit amount of a CD if held to maturity, regardless of the performance of the underlier to which the CD is linked, subject to the creditworthiness of the issuer with respect to any amount in excess of applicable FDIC insurance limits.

Structured investment products and services may be offered through SIMON Markets LLC (“SIMON”). SIMON is a registered broker/dealer, member FINRA and SIPC, and is affiliated with iCapital, Inc. and its subsidiaries. Please see the disclaimer at the end of this document for more information about these entities.

Please contact your financial professional or a fund manager to learn more.




This material is intended as general background information, for educational purposes only, and this material should not be used as a primary basis to make an investment decision. The material provides a general overview of the products described, and actual financial instruments may differ materially from those described. No person should consider investing in an instrument on the basis of these materials. Any investment decision should be made only after carefully reviewing the applicable prospectus. Please remember that all instruments described in this material involve a risk of loss. This does not constitute legal, accounting or tax advice, and the recipient should consult with his or her legal, accounting or tax adviser regarding the instruments described in this material.

This material is for informational purposes only and is not to be construed as a recommendation or an offer or solicitation to buy or sell any security, financial product or instrument, or otherwise to participate in any particular trading strategy. In providing information on hypothetical, generic structured investments, neither SIMON Markets LLC nor Axio Financial LLC is recommending a specific security, or recommending investing a certain percentage of a portfolio to one structured investment. Before investing in any product, an investor should review the prospectus or other offering documents, which contain important information, including the product’s investment objectives or goals, its strategies for achieving those goals, the principal risks of investing in the product, the product’s fees and expenses, and its past performance.

Please note that there is no public secondary market for structured investments. Although the issuer may from time to time make a market in certain structured investments, the issuer does not have any obligation to do so and market making may be discontinued at any time. Accordingly, an investor must be prepared to hold such investments until maturity. Any or all payments are subject to the creditworthiness of the issuer. SIMON Markets LLC operates a platform that makes available offerings of structured investments and annuities to financial professionals. In operating this technology platform, SIMON Markets LLC earns revenue based on the volume of transactions that take place in these products and would benefit by an increase in sales for these products. Issuers of structured investments pay Axio Financial LLC fees based on the size of transactions.

This material may not, without the prior written consent of SIMON Markets LLC or Axio Financial LLC, be (i) copied, photocopied, or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the recipient. Neither SIMON Markets nor Axio Financial shall have any liability, contingent or otherwise, to the user or to third parties, for the quality, accuracy, timeliness, continued availability, or completeness or to update any data contained in this material nor for any special, indirect, incidental or consequential damages which may be incurred or experienced because of the use of the data made available herein, even if SIMON Markets or Axio Financial has been advised of the possibility of such damages. This material was not prepared with a view to public disclosure or to conform with any disclosure standards under any state, federal or international securities laws or other laws, rules or regulations, and neither SIMON Markets LLC nor Axio Financial LLC take any responsibility for the use of the information in this material.

Structured investment products and services may be offered through SIMON Markets LLC and/or Axio Financial LLC, each a registered broker/dealer, member FINRA and SIPC, and subsidiary of iCapital, Inc. (“iCapital). iCapital affiliates include Institutional Capital Network, Inc., iCapital Securities, LLC, and iCapital Advisors, LLC. iCapital Securities, LLC, a registered broker/dealer, member FINRA and SIPC, offers alternative investment products and services. iCapital Advisors, LLC is an investment adviser registered with the SEC. The referenced registrations and memberships in no way imply that the SEC, FINRA or SIPC have endorsed the entities, products or services discussed herein. iCapital and iCapital Network are registered trademarks of Institutional Capital Network, Inc. Additional information is available upon request.

© 2023 SIMON Markets LLC. All rights reserved.
© 2023 Institutional Capital Network, Inc. All Rights Reserved.

Was this article helpful?
Back to Structured Investments