Market Linked Investments

Wells Fargo Securities offers a variety of Market Linked Investments that are available through Wells Fargo affiliates and third-party broker dealers.

Market Linked Investments have complex features and are not suitable for all investors. Before deciding to make an investment you should read and understand the applicable offering documents provided by the applicable issuer. Learn about General Risks and Investment Considerations that apply to market linked investments.

Market Linked CDs

Market Linked CDs are certificates of deposit that provide for the return of your original deposit amount at maturity, while also offering the potential for a supplemental payment at maturity or periodic interest based on the performance of an underlying market measure.

Market Linked Notes

Market Linked Notes typically allow you to participate in the potential appreciation of an underlying market measure, possibly subject to a cap, while also protecting against potential declines in the market measure.

If held to maturity, these investments provide for the repayment of an investor's initial principal amount, regardless of the performance of the underlying market measure, subject to the ability of the issuer to make payments when due. If the issuer defaults on its payment obligations, investors could lose their entire investment.

You should carefully review the offering documents for a particular Market Linked Note to understand how the appreciation of the underlying market measure will be measured. It is possible that the applicable method of measurement may result in a return on the Market Linked Note that is less than might have been realized on a direct investment in the underlying market measure. Market Linked Notes are unsecured debt securities of the applicable issuer, and investors will have no ability to pursue the underlying market measure or any assets included in the underlying market measure for payment.

Market Linked Notes With Partial Downside Protection

Occasionally, we offer Market Linked Notes with a maximum potential loss of up to 10% of principal if held to maturity, subject to the ability of the issuer to make payments when due. These notes provide for a minimum payment at maturity of 90% of the principal amount or greater.

These notes are referred to as Market Linked Notes with partial downside protection and will be specifically identified as such.

Market Linked Securities

For investors who are willing to accept a potential loss at maturity of greater than 10%, we offer Market Linked Securities.

Market Linked Securities typically provide you with the opportunity to earn enhanced returns based on the performance of an underlying market measure if the market measure appreciates, usually subject to a cap, while exposing you to a potential loss of principal if the market measure depreciates.

These securities may include some form of limited protection against declines in the market measure if held to maturity, subject to the ability of the issuer to make payments when due. If a Market Linked Security provides a measure of protection against declines in the underlying market measure, investors will be repaid their principal at maturity so long as the market measure does not decline below a specified threshold level. However, if the underlying market measure does decline below the threshold level, investors will incur a loss on their investment. The degree of that loss will depend on the type of protection provided by the Market Linked Security. In any case, any protection provided by a Market Linked Security against a decline in the underlying market measure will be limited, and you may incur a substantial loss on your investment. Any protection applies at maturity only and, if the issuer defaults, you could lose your entire investment.

You should carefully review the offering documents for the particular Market Linked Security you are considering to ensure that you understand the terms of any protection it offers against declines in the market measure.

Market Linked Securities are unsecured debt securities of the applicable issuer, and investors will have no ability to pursue the underlying market measure or any assets included in the underlying market measure for payment. Any enhanced returns and protection apply at maturity only and are subject to the ability of the issuer to make payments when due.

These investments can:

  • Help you gain exposure to a variety of asset classes while potentially reducing exposure to a decline in an underlying market measure if the Market Linked Investments are held to maturity, subject to the ability of the issuer to make payments when due. Not all Market Linked Securities provide protection against a decline of the underlying market measure, however.
  • Be used as an alternative to a direct investment in the underlying asset classes, as part of an overall asset allocation strategy, or as a complement to other direct investments in the underlying asset classes with a different risk-return profile than those other investments.

What are Market Linked Investments?

Our Market Linked Investments generally offer no fixed coupon and instead provide for a payment at maturity or on specified dates during their term, based on the performance of an underlying market measure.

In the case of Market Linked Notes with partial downside protection and Market Linked Securities, the payment at maturity may be less than the original principal amount.

Characteristics of Market Linked Investments

  • Maturity: Typically between one and 15 years.
  • Market measure: Linked to the performance of equities, currencies, commodities, or a combination of one or more asset classes.
  • Minimum investment: Available in increments of $1,000, typically with a $1,000 minimum investment.

Advantages of Market Linked Investments

  • Exposure to a variety of asset classes: Asset classes underlying Market Linked Investments may include domestic and international equities, commodities and currencies. However, Market Linked Investments are not equivalent to investing directly in those asset classes. Investors will have no ability to pursue the underlying market measure or any assets included in the underlying market measure for payment. If the issuer defaults on its payment obligations, investors could lose their entire investment.
  • Accessibility: Participation in investment opportunities that may otherwise be difficult to replicate as an individual investor.

Estimated Value of Market Linked Investments

  • The original offering price of each Market Linked Investment will include certain costs that are borne by you. Because of these costs, the estimated value of a Market Linked Investment on the pricing date will be less than the original offering price. If specified in the applicable offering document, these costs may include the underwriting discount or placement fee, the hedging profits of the issuer's hedging counterparty (which may be an affiliate of the issuer), hedging and other costs or fees associated with the offering and costs relating to the issuer's funding considerations for instruments of this type. See "General risks and investment considerations" below and the applicable offering document for more information.
  • The issuer will disclose the estimated value of a Market Linked Investment in the applicable offering document. The estimated value of a Market Linked Investment will be determined by estimating the value of the combination of hypothetical financial instruments that would replicate the payout on the Market Linked Investment, which combination consists of a non-interest bearing, fixed-income bond and one or more derivative instruments underlying the economic terms of the Market Linked Investment. You should read the applicable offering document for more information about the estimated value of a Market Linked Investment and how it is determined.

Market Linked Investments are not suitable for all investors. Please contact a financial advisor to learn if Market Linked Investments are right for you.

Risks related to Market Linked Investments will vary depending on the terms of such products. Prior to investing in any Market Linked Investment, you should carefully review the related offering documents, including the discussion of risks that apply to such product.