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Market-Linked CDs

Market-Linked CDs provide the potential for appreciation based, in part, on the performance of a market measure, such as an equity or a commodities index or a basket of foreign currencies, when held to maturity, and are subject to the creditworthiness of the issuing financial institution. Unlike traditional certificates of deposit that pay a fixed rate of interest, the returns on Market-Linked CDs are based on market performance that may be subject to restrictions on the upside.

Features and Risks of Market-Linked CDs
  • FDIC Protection:  Only the Market-Linked CD principal is insured up to the applicable FDIC limit per account holder. Any investment in a Market-Linked CD that exceeds the applicable FDIC limit is subject to the credit risk of the issuing bank. It is the responsibility of the investor to consider the total deposits held with the issusing bank when reviewing for FDIC coverage.
  • Deposit Protection:  Investors receive a minimum of 100% of the Market-Linked CD’s principal when the investment is held to maturity, subject to the creditworthiness of the issuing bank for investors who hold more than the applicable FDIC insurance limits.
  • Minimum Investment:  A $4,000 minimum investment is required and may be increased in increments of $1,000, until the offering closes.
  • Returns:  While certain Market-Linked CDs pay a minimum return when held to maturity even if the underlying market measure declines, the payment at maturity may be less than that of a traditional certificate of deposit or debt instrument of a comparable maturity. There is typically no periodic income. Investors with current income needs should generally not invest in Market-Linked CDs.
  • Liquidity:  Market-Linked CDs have limited liquidity; there is no secondary market. While early redemptions may be allowed after a holding period on most issues, there is no guarantee that early redemptions will be allowed for every issue. However, such early redemptions may result in loss of principal and are subject to early redemption penalties as outlined in the Disclosure Statement. Funds needed prior to maturity should not be invested in a Market-Linked CD.
  • Suitability:  Investments in Market-Linked CDs are not suitable for all investors, especially those needing liquidity or income prior to maturity. Prior to investing, investors should make sure they discuss all of their liquidity and income needs with their UnionBanc Investment Services Financial Advisor and their legal and tax advisors.
In addition to the investor considerations listed above each Market-Linked CD will have its own unique set of risks above and beyond those of a traditional certificate of deposit. Market-Linked CDs are offered with a Disclosure Statement and disclosure supplement(s). Prior to purchase, investors should carefully read the Disclosure Statement and any applicable disclosure supplements for the specific Market-Linked CD they are interested in purchasing as these documents provide additional important information.

Explore the features of a Market-Linked CD today. Speak with a UnionBanc Investment Services Financial Advisor or call 1-800-634-1100 to set up an appointment.
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