Through the first quarter of 2026, financial markets have significantly reduced expectations for Federal Reserve rate cuts. In fact, some data now suggests investors are preparing for the possibility that no rate cuts will occur this year.

Traditional cash and savings vehicles offer limited real returns, while equities remain sensitive to changing interest rate expectations and market swings. As a result, many are looking for ways to enhance yield without taking on the full risk of the stock market.

One solution worth considering is structured notes — specifically, short-term equity-linked notes. For investors willing to take on a modest level of additional risk, allocating a portion of cash reserves into a 13-month note may provide a more attractive return profile.

These notes are tied to major market indexes and include a downside buffer typically in the 35% to 40% range, offering a level of protection against moderate market declines. They pay interest at maturity, and that income is generally taxed at the more favorable capital gains rate rather than ordinary income.

In addition, by pooling client investments and sourcing competitive bids, it is often possible to secure more attractive terms. While returns vary with market conditions, recent offerings have produced yields in the range of approximately 9% a meaningful improvement compared to traditional bank products.

While structured notes are not FDIC insured, they are issued by large, well-capitalized financial institutions such as JP Morgan and Citibank. The underlying strategies are managed and hedged to help mitigate downside risk within the defined buffer. Structured notes can offer a balanced approach while providing enhanced income potential with a level of built-in downside protection.