Five Year Performance Review 2023

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Headline Data

Structured Products Maturities Number of product maturities

2018

2019

2020

2021

2022

Average

385 362

334 315

235 163

529 483

634 624

423 389

Number of products producing positive returns Number of products returning capital only

23

15

56 16

40

10

29

Number of products which lost capital Average duration / term (years)

0

4

6

0

5

3.77

3.81

4.78

3.39

3.24

3.63

Average Annualised Returns All products

6.35% 5.73% 3.52% 6.20% 6.45% 5.93% 9.27% 8.95% 8.59% 9.34% 8.97% 9.07% 2.91% 1.81% -3.09% 2.56% 3.99% 2.31%

Upper quartile Lower quartile

Key Takeaways g 634 plans matured in 2022, a 20% increase from 2021 and largest maturity haul in the last five years. g No maturing plan in 2022 realised a capital loss for investors, the first time since 2018. g 624 of the 634 2022 maturities generated positive returns for investors, with the remaining 10 being deposit-based plans which did not expose capital to risk of loss and returned the original investment. g The 634 maturities gave an average annualised return of 6.45% with upper and lower quartiles of 8.97% and 3.99% respectively. Resultantly giving a tighter spread when compared with the five year average annualised return of 5.93% with upper and lower quartiles of 9.07% and 2.31% respectively. g 2022 represented a more successful year in comparison to the five-year average: g 98.42% of maturing plans in 2022 generated positive returns, outperforming the five year average of 91.96%. g Only 1.58% of maturities returned capital only compared to a five-year average of 6.86%.

g The reoccurring theme from the last five years, is that all capital at risk autocalls linked to the FTSE 100 & CSDI only*, maturing with positive returns for investors. Average annualised return for FTSE only autocalls in 2022 was 7.06% over an average duration of 2.54 years, with upper and lower quartiles of 9.28% and 5.42% respectively. g The 554-maturing capital at risk plans collectively produced an annualised return of 6.89% over an average duration of 3.04 years, beating the five-year average by 0.21%. g The FTSE 100 continued to be the most prevalent underlying measurement utilised in isolation, making up over three-quarters of maturities in 2022 and outstripping the five year average by almost 200 maturities. g 417 of capital at risk maturities linked to the FTSE 100 produced annualised return of 6.66% over an average duration of three years, underperforming the year before by 0.35% and below the five-year average by 0.17%. the upper quartile returned 8.96% per year whereas the lower quartile returned 4.78% per year. g No maturing FTSE 100 only linked capital at risk autocall plan has failed to mature with a gain for investors in the UK retail space since 2013.

Notes Lowes’ database is maintained with details of all structured products launched in the UK that are promoted through Independent Financial Advisers and other wealth managers. It does not include private placement trades or, products distributed solely through closed or, restricted channels. 5 year averages are calculated from all products over a 5 year period. Please note that 5 year averages for ‘Number of’ have been rounded to the nearest whole number and therefore the constituent parts may not equal the sum of maturities. Where 5 year average figures are quoted for duration and annualised returns, they are calculated using weighted average values. Past performance is not a guide to future performance. Investments of this nature carry risks to capital.

*The FTSE CSDI measures the performance of the same 100 shares in the same weightings as the FTSE 100 and the two are over 99% correlated - we have therefore grouped the two underlyings for the purpose of this review and refer to them collectively as FTSE.

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