Issue 131

INVESTMENT

How 10-year structured products have hit the ball out of the park

The original plans offering the highest potential return required the FTSE 100 to be 10% above the value at the start of the plan to deliver the return. Over the years we have been able to bring that down to 5%, increasing the opportunity for the plan to mature positively for investors. Another change has been to swap out the FTSE 100 index as the underlying benchmark for the plans and instead use the FTSE CSDI. This index was created specifically for structured products and closely replicates the performance of the same 100 companies, but accounts for dividends differently. Both of these changes have been made to help improve returns and make these plans even more attractive for investors. FTSE Autocall Maturities October 2018 - May 2024

The 120 th FTSE 100-linked 10:10 Plan matured in May 2024. The 10:10 plans were a concept developed as a co operation between Lowes and Mariana Capital, with the first plan launched in late 2015. The investments drew upon Lowes extensive experience in the structured investment sector and took advantage of a pricing anomaly, which enabled the term of an autocall product to be extended beyond the then typical six years to, in this instance, ten years. We calculated plans could be created with minimal negative impact on the potential returns, whilst increasing the number of potential opportunities for positive returns which might be achieved. Our thinking provided extra protection. All 120 of the FTSE 100-linked 10:10 plans, that have matured to date, did so with a positive return for investors. The average annualised return across the 120 plans is 8.52%. None have made a loss for investors - on average, the plans have taken three years to mature. If we break this down further, as you can see from the table, the average return for the top 25% of matured 10:10 plans was 10.97% and for the lowest quartile, 6.55% per annum. Each tranche of the 10:10 plans offers three options of potential returns. Typically, the highest returning option requires the underlying index to be at a set percentage above its value at the start of the investment; the second, to be at or above the start value; whilst the third option drops the value on a stepped basis from year two, so at year 10, the index only has to be at 82.5% of the start value for the plan to mature with a positive return for investors. Autocall structured products are celebrating 20 years of successful maturities. Over 2,000 FTSE 100-linked autocalls have now matured and they are by far the most popular of these investments on offer. In our updated guide - A Consumer’s Guide to Autocalls – A 21 Year Evolution we call them the UK’s Best Investment Secret. The guide provides an independent review of the evolution of the sector and its performance. It highlights the history and features of autocalls to help demystify them and dispel myths. Structured product autocalls are a proven, successful solution for investors. While all investment involves risk and all investors should be prepared for that ‘worst-case scenario’, 20 years of maturities and historic performance shows autocalls have largely delivered. 20 year track record

All Products

10:10 Plans

Number of maturing products

1088 120

Number returning a positive oucome

1083

120

Number returning capital only

5 0

0 0

Number returning a loss Average total gain Average term (years)

18.08% 28.01% 2.42 3.04

Average annualised returns 7.18% 8.52% Average annualised returns upper quartile 9.43% 10.97% Average annualised returns lower quartile 5.39% 6.55%

Of the 2,000 which have matured to date, thirteen returned capital only and the rest returned gains. The average annualised return and duration has been 7.6% pa over 2.2 years. With this 20-year track record, we believe structured products are a better way for many to invest, at least for an element of their portfolios, particularly, when contained within ISA and SIPP tax wrappers.

If you’d like to know more, you can download the Guide from our website – Lowes.co.uk/autocall – or talk to your Lowes Adviser or call 0191 281 8811 .

Lowes.co.uk

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