Morgan Stanley Structured Product Tied to ETFs Could Pose High Risk for Investors
The White Law Group is investigating potential securities claims involving Morgan Stanley structured products tied to ETFs, including the SPDR® S&P® Biotech ETF, Technology Select Sector SPDR® Fund, and SPDR® S&P® Regional Banking ETF.
The structured product—Morgan Stanley’s Contingent Income Auto-Callable Securities due April 27, 2023 (CUSIP: 61771VUW8)—was issued in April 2021 with a face value of $21,585,000. These notes offered enticing quarterly coupons but exposed investors to full downside risk tied to the performance of the worst-performing ETF in the basket.
Details of the Investment
Issue Date: April 27, 2021
Linked Securities:
• SPDR® S&P® Biotech ETF (XBI)
• Technology Select Sector SPDR® Fund (XLK)
• SPDR® S&P® Regional Banking ETF (KRE)
Product Type: Contingent Income Auto-Callable Structured Note
Face Value: $21,585,000
Final Payout: Based on lowest performing ETF as of April 27, 2023
Payout Structure:
? If Worst ETF ? 70% of initial price: $1,000 + final quarterly coupon
? If Worst ETF < 70%: $1,000 × (final ETF value ÷ initial ETF value) — substantial loss of principal possible
Quarterly Coupon: $25 per $1,000 note (10% per annum), only paid if all ETFs stay above their 70% downside thresholds
Early Redemption: Called early if all ETFs close at or above initial price on any observation date
Why Might This Investment Be Risky?
- Payment depends on the lowest performer among the 3 ETFs
- No coupons paid if any ETF dips below 70% of initial value
- Full downside exposure if the note is not called and the worst ETF ends below 70%
- Estimated value at issue: $958.90 per $1,000 note
Understanding the Risks
- No principal protection if worst ETF falls below 70%
- High volatility in biotech, banking, and tech sectors
- Dependent on 3 separate asset classes
- Credit risk of Morgan Stanley Finance LLC
- Not FDIC insured
FAQs – Morgan Stanley Auto-Callable Note (CUSIP: 61771VUW8)
Q: What are these notes linked to?
A: The performance is tied to the worst-performing of 3 ETFs: XBI, XLK, and KRE.
Q: Will I receive income?
A: You’ll earn a 2.5% quarterly coupon only if all three ETFs are above their respective downside thresholds (70% of initial price) on the observation date.
Q: What happens at maturity?
A: If the worst ETF finishes above 70%, you receive $1,000. If it finishes below 70%, you receive less than $1,000 based on its percentage decline.
Q: Can it be redeemed early?
A: Yes, the note is automatically called if all three ETFs are at or above their starting prices on an observation date.
Q: How much could I lose?
A: If the worst ETF drops substantially and the note is not called, you may lose a significant portion of your investment.
Free Consultation
If you suffered losses in this investment, contact The White Law Group for a free review of your case. Call (888) 637-5510 or visit whitesecuritieslaw.com for more information.
