No - returns are never guaranteed. That’s a fundamental rule of investing. If a product offers higher returns in some scenarios, it must deliver lower returns in others.
With traditional bank-issued structured notes, this tradeoff is fixed upfront. The bank designs a payoff profile: strong returns in certain scenarios, weaker outcomes in others; and then prices it conservatively. In practice, that means you’re giving up some upside (and sometimes taking more downside risk) so the bank can build in a margin for itself.
With Lati Capital, you still have that same core tradeoff between outcomes across scenarios. But there’s an additional layer: the payoff is dynamically hedged rather than contractually fixed.
That means:
- We target a specific payoff profile and aim to replicate it as closely as possible
- In most cases, results are close to target
- But outcomes can be slightly better or worse depending on market conditions and hedge performance
So unlike a bank note, even the "target" payoff isn’t guaranteed.
Why do it this way? Because we don’t charge the embedded fees that banks do. Instead of the bank taking a margin and delivering a smoothed, conservative outcome, you keep that value, but take on the variability that comes with it.
A simple way to think about it:
- Bank structured note: more certainty, but lower expected return (fees baked in)
- Lati Capital: higher expected value, but some variability around the target payoff
On average, we aim to deliver the payoff you designed, without the bank’s margin.