Tapping into Market Gains Safely: Introducing Arta's Protected Growth


October 17, 2023

Recent years have seen markets tested by factors like inflation, volatility, and climbing interest rates. The fallout? Significant losses for certain investors. 

This scenario has left many cautious, sitting on a pile of uninvested cash. Some are leaning into safer options like Harvest Treasuries for modest returns. However, for others, such yields fall short of their wealth goals, and the stock market's swings are hard to stomach. So, when faced with these financial challenges, where do the ultra-wealthy turn? Enter structured investments.

What are structured investments?

Structured investments combine a variety of different asset classes (most commonly corporate bonds and options) into a single investable product with predefined characteristics. They are typically customized to meet the specific investment goals and risk tolerance of an individual investor. We like to think of them as “pre-packaged” investment strategies. 

Let’s break down some of the critical elements.

Depending on how the product is structured, some of the advantages of structured investments include:

  • Diversification: Structured investments give you a chance to put money into different types of assets and potentially earn extra returns—things like commodities and currencies—that you might not normally have in your investment mix.

  • Potential for higher returns: They can offer returns that outpace traditional investments like stocks or bonds.

  • Customization: They can be tailored to meet specific investment objectives. For example, they can be structured to have customized time horizons.

  • Capital Protection: Some structured investments come with a capital protection feature. This means an investor can receive back a significant portion, if not all, of their initial investment at maturity, irrespective of how the underlying asset performs.

It's important to note that, like all investments, structured investments aren't without their risks.

Depending on how the product is structured,  some unique risk factors to consider include: 

  • Cost: Traditionally, structured investments have come with a hefty price tag thanks to the fees charged by investment banks and other financial institutions.

  • Complexity: Their complex nature can be challenging to grasp, and may require the investor to consult an advisor regarding taxes.

  • Counterparty risk: There's the potential for losses if the issuing bank or institution defaults.

  • Illiquidity: They often have multi-year lock-up periods, limiting the ability to sell or exit the investment quickly.

For the ultra-wealthy, structured investments are a way to reach specific investment targets not possible with usual assets. But for retail investors, the steep fees and big entry requirements make these opportunities hard to access. That’s where Arta comes in. 

Introducing Principal Protected Growth by Arta

Our first structured investment, Protected Growth, is available in the Arta app starting today. 

Protected Growth (PG) is a principal-protected structured investment with a three-year term with an investment objective of capturing market upside while eliminating market downside.  Here are more details: 

  • Enjoy the market's highs without the lows: At maturity in three years, you'll either get back your principal (if the S&P 500 is down) or you’ll get your principal plus a percentage of  S&P 500 growth (if the S&P 500 is up).

  • Higher potential returns than bonds, more safety than stocks: Just like a bond, your initial investment is protected. Unlike a bond, however, you still get to participate in potential market growth, earning a majority of the upside of the S&P 500. But it’s safer than investing in an S&P 500 ETF or index - your initial principal will remain whole, without any of the downside risk of the S&P 500 at maturity.

  • Partnering for peace of mind: We’ve teamed up exclusively with “Globally Systemically Important Banks.” That means we're working directly with some of the biggest and most stable banks out there—think Goldman Sachs, Morgan Stanley, and J.P. Morgan. What does that mean for you? Unless the issuing bank goes under, your principal investment is 100% protected, even if the stock market takes a hit over the next three years.

  • Affordable access: While these products often come with hefty fees  (often over 1% in annual fees or even larger upfront fees) and through traditional advisors, Arta offers PG at a competitive 0.50% fee with a minimum investment of $25,000. Even better? We're waiving this fee for the rest of 2023.

Principal Protected Growth can help manage your investment objectives and strike the ideal balance between potential gain and strategic risk management. If you’re interested, please see more details here

And remember, navigating the path to financial success should never be a solo endeavor. If you have further questions, our team is here to support you at every step.


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