Are market-linked GICs a good bet to catch the eventual rebound?

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Advisors need to be very selective about how these equity-linked notes are structured and where they fit into a client’s overall portfolio

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“If you look, historically, back to the tech bubble and then [the global financial crisis in] 2008, within 12 to 36 months, investors made their money back and then had more upside,” says Kaif Lalani, financial advisor with the Hudson Wealth Management Group at Raymond James Ltd. in Toronto. “This gives you the opportunity to make your money back but still protect your downside.”

“Many times, clients were willing to take the risk” of investing directly in equities, she says. “The market’s changed. Everyone is asking about GICs, or different structured notes, which is essentially what a market-linked GIC is.” While there’s typically no fee to purchase a market-linked GIC, there’s often compensation for the issuer built in.

“You get a base return, which is nice, though your potential overall return does have a ceiling,” Ms. Bryan says.

 

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