CSP Structured Products Guide

Why we believe structured products are an investment worth considering in 2021...

Throughout the preceding decade (1st January 2010 – 31st December 2019), 3,895 products matured, with structured products returning an average annualised return of 6.98% and structured deposits returning 3.64% per annum on average. Just 60 plans (1.54%) maturing between 2010 and 2019 realised a capital loss.

Structured products allow you exposure to the upside of the stock market, without full par r cipa a on in the downside; capital protec c on barriers o ff er protec c on against falls in the underlying index (or assets) to predetermined percentage level without capital being eroded. Once the barrier is breached capital will be eroded by 1% for each 1% fall in the underlying.

The most prominent product shape - FTSE 100 linked autocall capital-at-risk plans – returned an average annualised return of 7.31% in 2020, despite March’s market crash. Whilst the UK stockmarket has shown recent signs of recovery, it remains well below the level at which it started 2020 – perhaps indica a ng a good me to invest.

A wide range of products, deployed by an array of providers, allow investors to align investments with their risk appe e te and wider por r olios. Currently there are several household name banks ac c ng as counterparty to products available in the retail space, including Barclays Bank plc, HSBC Bank plc, Morgan Stanley & Co. Interna a onal plc etc, so that investors can mi i gate their vulnerability to counterparty default risk via diversi fi ca a on. In the case of counterparty default, structured deposits may be eligible for FSCS protec c on.

Investment into structured products can be made via: individual or joint applica a ons, new ISAs, exis s ng ISA transfers, pension schemes (SIPPs / SSASs) and trustees, companies and partnerships. There will be variable minimum & maximum investment amounts imposed by the respec c ve provider, please refer to the product literature.

The structured nature of these investments allows for a degree of planning with respect to any CGT or income tax liability arising from the plan.