Lowes Annual Performance Review 2024

UK Structured Products Sector Maturity Analysis Covering all intermediary distributed retail products that matured in 2023

Contents Introduction to our analysis...........................................................................................................................3 Headline data.....................................................................................................................................................4 Lowes FTSE linked 2023 structured performance..............................................................................5 SP - The Stars.....................................................................................................................................................6 6 - year autocalls cap out................................................................................................................................7 Loss makers – first since 2021.....................................................................................................................8 20 years since first FTSE only autocall.....................................................................................................9 Time to call.........................................................................................................................................................10 Analysis and Annualised Performance 2023.........................................................................................11 Analysis and Annualised Performance by Product Shape - Autocall/Kick-Out Products.....12 Analysis and Annualised Performance by Product Shape - Growth Products.........................13 Analysis and Annualised Performance by Product Shape - Income Products.........................14 About Lowes Financial Management and Structured Products.....................................................15

Welcome to Lowes Financial Management’s Structured Products Annual Performance Review 2024, providing a thorough overview of the UK retail structured product sector covering all maturities that occurred in 2023. 2023 witnessed a shift in global headlines from the war in Ukraine to the Israeli/Palestinian conflict whilst making little more than passing references to various persistent struggles in other corners of the world, from Myanmar and Sudan to Ethiopia. The profound impact of these challenges on lives is something we can scarcely comprehend, and our hearts go out to those enduring such hardships. In the UK we have faced challenges like inflation, rising interest rates, and various domestic political matters. While these issues are comparatively trivial, they of course have personal significance and direct influence on our daily lives and investment portfolios. The FTSE 100 started 2023 continuing a rally that began in Q4 2022 and in February, for the first time ever the UK blue chip index surpassed the 8,000 mark. Lasting for just three days it then quickly returned to far more common mid 7,000 levels. With the average closing level of the FTSE over the year at 7,615.5, this did however prove sufficient to trigger a large number of positive structured product maturities. Whilst the headline level of maturities is marginally down from 2022, we are happy to reflect on yet another positive year for the retail sector. 629 plans matured throughout 2023 achieving an average annualised return of 6.51% across an average investment duration of 3.14 years. Of the 629 maturities in 2023, 608 returned positive results for investors, 15 returned capital only (notably including some which were linked to the FTSE 100 only) and 6 matured with a loss. These were the first negative maturities since 2021. This maturity analysis delves into these results in detail and we hope that you find the content of interest.

We also wish to reflect on another successful year of selected Lowes ‘Preferred’ plans. Of the 629 total maturities, 118 were identified as ‘Preferred’ at the time of launch. Unfortunately, three ‘Preferred’ plans matured realising losses. These three were noted as high-risk speculative investments that would be suitable only for a small portion of a diversified portfolio which, in these instances did not prove to be successful. Overall Lowes ‘Preferred’ plans gave investors average annualised returns of 6.54% over an average term of 3.87 years. Those Preferred plans that were linked solely to the FTSE 100 (and FTSE CSDI) returned 6.89% and did outperform the subsector by an average of 0.61%. Other plans that were exclusive to Lowes clients fared slightly better. Undoubtedly, 2023 was another positive year for the UK retail structured product sector demonstrating the continued strength of these investments and how they continue to offer good solutions for investors. Admittedly the year brought a few hiccups, however somewhat minor compared to the wider investment universe and it is important to reflect on over 96% of maturities having provided investors positive outcomes. Consistently good returns for investors have been provided, exactly how they were defined in the contracted terms. Structured products continue to perform as said on the tin with 2023 being another year of increased investor interest in what we have always believed to be an exceptional investment solution.

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. The ‘Stars’ are the relevant top performing plans in each sub-sector. Throughout this document, rounding to 2 decimal places has been applied.

When referring to quartiles, we mean the average of the best / worst 25% of all respective maturities. The annualised return is calculated using the total return over the holding period from the Strike Date to the Final Index Date. Past performance is not a guide to future performance. Investments of this nature carry risks to your capital. Errors and omissions accepted.

Ian Lowes Managing Director Lowes Financial Management

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