Lowes Annual Performance Review 2024

Analysis and Annualised Performance 2023

By Product Type

Capital at Risk

Structured Deposits

Structured Product Maturities

All products

Lowes ‘Preferred’ products

All products

Lowes ‘Preferred’ products

Number of product maturities

565

102

64 56

16 16

Number of products producing positive returns 552

98

Number of products returning capital only Number of products which lost capital

7 6

1

8 0

0 0

3

Average duration / term (years)

3.02

3.85

4.19

4.01

Average Annualised Returns

All products

6.90% 6.54% 10.08% 9.39%

3.07% 4.81% 0.71%

4.61% 5.38% 3.93%

Upper quartile Lower quartile

3.63%

2.61%

FTSE 100 and FTSE CSDI Indices Only*

Capital at Risk

Structured Deposits

Structured Product Maturities

All products

Lowes ‘Preferred’ products

All products

Lowes ‘Preferred’ products

Time to call

Number of product maturities

415

99 98

52 50

16 16

Number of products producing positive returns 408

Number of products returning capital only Number of products which lost capital

7 0

1

2 0

0 0

0

Twelve plans of this breed were issued (by strike date) in 2023 by three different providers utilising only Barclays or Credit Agricole as counterparties. The majority have five-year maximum terms, whilst one ten-year maximum has been seen as well as other variations such as semi-annual callable observations from the bank – essentially giving greater authority to the counterparty. The case remains that investors are committing to a five to ten-year maximum term but the bank can close out the contract on any callable observation date from the second onwards and are therefore likely to do so if interest rates have declined. In the meantime, investors secured an attractive rate of return, with no market risk, at a level that was unheard of just a year earlier. Whether these plans are your cup of tea or not, it is clear that the retail structured product sector continues to innovate to provide advisers and investors with more solutions for personal finances.

2023 witnessed the introduction of a new product shape in the form of Recallable Growth and Income plans, initially from MB Structured Investment followed closely by Meteor. Whilst issuer callable contracts are nothing new, to date the UK retail sector has only seen such contracts with an underlying index link, the position and trajectory of which would be a major factor in determining the issuer’s appetite to call the investment early. With the latest ‘Recallable’ plans the only significant determinant will be interest rates. The first of such plans to be issued in the retail space was MB’s Recallable Fixed Growth Plan August 2023, which offered a simple 7% per annum payment for each year it was in force, payable either at the 5th anniversary maturity date or on the 2nd, 3rd or 4th if called earlier at the issuer’s (Barclays) behest. It is important to appreciate that whilst not designed as capital at risk plans, these are not deposits but in fact structured as capital ‘protected’ plans and as such have capital at risk from counterparty failure.

Average duration / term (years)

3.08

3.78

3.95

4.01

Average Annualised Returns

All products

6.63% 7.25%

3.49% 4.81% 1.85%

4.61% 5.38% 3.93%

Upper quartile Lower quartile

9.13%

9.44%

4.23% 5.29%

Non-FTSE 100 / CSDI Indices Only

Capital at Risk

Structured Deposits

Structured Product Maturities

All products

Lowes ‘Preferred’ products

All products

Lowes ‘Preferred’ products

Number of product maturities

150

3 0 0 3 6

12

0

Number of products producing positive returns 144

6 6 0

- - - - - - -

Number of products returning capital only Number of products which lost capital

0 6

Average duration / term (years)

2.86

5.25

Average Annualised Returns

All products

7.66% -17.04%

1.25% 4.20% 0.00%

Upper quartile Lower quartile

11.80% 2.46%

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*The FTSE CSDI measures the performance of the same 100 shares in the same weightings as the FTSE 100 but accounts for dividends differently. The two are over 99% correlated – we have therefore grouped the two underlyings together for the purpose of the review.

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