A structured note is basically a combination of bonds and derivatives. A structured note is a customized financial product that is typically structured by an investment bank. Structured notes are often marketed as products that provide some form of principal guarantee or minimum return. As it is essentially a package of derivatives which can be put together with many customized features, structured products may claim to offer enhanced returns with theoretically limited downside. However, principal protections are subject to any credit risk associated with the issuing investment bank. Also, owners of structured notes need to hold the notes to maturity in order to be made whole on any principal guarantee. As a whole, structured notes tend to be very complex, high-risk and illiquid. Also see the definition for structured product.