Be careful when reading the disclosure and marketing materials and using the information contained. Are the minimum and maximum rates of return per year or are they for the full term to maturity? Sales and marketing materials often contain inadequate promotional presentations of the potential investment returns. For instance, beware of the following shortcomings:
In addition, PPNs are becoming more complex and pose investment risks that investors may not be fully informed about. Often investors just assume that today’s PPN is structured the same as previous PPNs and this may not be true.
Note: Through the sale of PPNs, intermediaries are selling retail investors products with investment risks that are more like those risks associated with alternative asset classes otherwise not accessible to retail investors without a prospectus.