what is an equity linked note eln 
an equity linked note eln is an investment product that combines a fixed income investment with additional potential returns that are tied to the performance of equities equity linked notes are usually structured to return the initial investment with a variable interest portion that depends on the performance of the linked equity elns can be structured in many different ways but the vanilla version works like a strip bond combined with a call option on a specific security a basket of securities or an index like the s p 500 or djia in the case of a note linked to an equity index the security would typically be called an equity index linked note understanding equity linked notesequity linked notes provide a way for investors to protect their capital while also getting the potential for an above average return compared to regular bonds in theory the upside potential for returns in an equity linked note is unlimited whereas the downside risk is capped even in the worst case scenario most equity linked notes offer full principal protection that is what makes this type of a structured product appealing to risk averse investors who nevertheless have a bullish outlook on the market that said equity linked notes only pay on maturity so there is an opportunity cost for locking in that money if only the principal is returned in the end 