Q2 2021 Maturity Results

Q2 2021 Maturity Results Josh Mayne, Lowes Financial Management Following on from Q1 2021, we were able to reflect on it as the best performing period for the UK retail sector since the beginning of the pandemic; impressively, Q2 2021 has gone one better… In the UK at the time of writing, over 80 million Covid-19 vaccinations have been given, and Boris Johnson has this week confirmed plans for the biggest lifting of lockdown restrictions since the beginning of the pandemic. It seems that as we edge back into ‘normality’ that the sector, and markets more generally have moved in line with this positivity – albeit not quite reaching pre pandemic levels. The average FTSE 100 closing level for Q2 2021 was 7,017.40, where the average level for the whole of 2020 was 6,276.21; consequently, Q2 2021 generated a total of 135 maturities throughout its three-month period, which was seven less than the two preceding quarters combined. Of the 135 maturing products, 85.92% (116 plans) realised a gain for investors’, 11.11% (15 plans) returning capital in full without gain, and just 2.96% resulted in a capital loss. 23 Lowes ‘Preferred’ plans matured in Q2, with all but four realising a capital gain.

Lowes ‘Preferred’

All Products

Not ‘Preferred’

Number of maturing products

135 116

23

112 97

Number returning a positive outcome

19

Number returning capital only Number returning a loss Average total gain Average term (years) Average Annualised Return

15

4 0

11

4

4

17.84%

19.75%

17.45%

3.34

3.63

3.28

6.13%

6.57% 11.10%

6.04% 9.76% 0.95%

Average Annualised Return Upper Quartile 10.06%

Average Annualised Return Lower Quartile

1.11%

1.91%

Q2’s maturing plans generated an average annualised return of 6.13% over an average term of 3.34 years. Consistent with Q1, Lowes ‘Preferred’ plans outperformed the sector’s average annualised returns by 0.44%, though across a slightly longer average investment term of 3.63 years.

Q2 Maturities most commonly held by Lowes clients...

The average annualised returns for the upper quartile of Q2 maturities generated an impressive average annualised return of 10.06%, with the three biggest hitters outlined below… 1. Hilbert Investment Solutions Kick Out Series 3 Stock Defensive Autocall Issue 6. This speculative ‘Preferred’ plan, linked to the performance of three FTSE 100 shares (Vodafone, Aviva and Barclays), matured after just 6 months returning investors original capital in full, in addition to an annualised gain of 21.19%. 2. Dura Capital Natixis FTSE 100 Autocall Plan 44. This ‘Preferred’ plan, linked to the performance of the FTSE 100 Index, matured after 1 year returning investors original capital in full, in addition to an annualised gain of 14.5%. 3. Meteor FTSE Kick Out Plan April 2020. This plan, again linked to the performance of the FTSE 100 Index, matured after 1 year returning investors original capital in full, in addition to an annualised gain of 13%. Unfortunately, however, four maturities in Q2 ultimately realised a capital loss for investors. All four plans were inherently risky term contracts, deriving their returns from the performance of a basket of individual shares. The four loss making Q2 Maturities...

Maturity Date

Underlying Change

Plan Gain

Term (Years)

Provider

Underlying

Société Générale 12/04/2021

FTSE 100 Index and EURO STOXX 50 Index -2.83% (1)

0% 6

Investec

19/04/2021

FTSE 100

-4.34% 24% 3

Investec

22/04/2021

FTSE 100

-1.48% 20% 2.5

Walker Crips 10/05/2021

FTSE 100

-4.16% 22.75% 3.5

Mariana

19/05/2021

FTSE 100

-6.97% 28.4% 4

Walker Crips 24/05/2021

FTSE 100

1.42% 17.5% 2.5

Income Paid

Capital Reduction

Equivalent Annualised Return

Worst Performing Share

Plan Name

Investec

03/06/2021

FTSE 100

0.03% 20% 2.5

Mariana FTSE 3 Step Down Kick Out Plan 2 SIP Nordic FTSE 4 Accumulator Kick Out Plan May 2015

Walker Crips 07/06/2021

FTSE 100

-3.47% 16% 2

N/A -52.92%

-11.78% Standard Chartered plc (down by 52.92%)

Investec

07/06/2021

FTSE 100

-5.93% 31% 4

N/A -49.76%

-10.83% Vodafone Group plc (down by 49.76%)

Investec

07/06/2021

FTSE 100

-5.93% 26% 4

FOCUS FTSE 4 Quarterly Income Plan April 2015 Meteor FTSE 5 Monthly Income Plan April 2015

Imperial Tobacco (down by 52.77%)

30.81% -52.77%

-3.64%

Investec

17/06/2021

FTSE 100

-2.77% 14% 2

45% -54.75%

-1.69% Standard Chartered plc (down by 54.75%)

Investec

28/06/2021

FTSE 100

-6.17% 22.5% 3

It is worth noting that no Lowes ‘Preferred’ plans realised a capital loss.

(1) Worst performing index (FTSE)

The table to the right offers a performance summary of the Lowes ‘Preferred’ plans, most held by our clients, that matured in Q2. There were several successful widely held maturities throughout the quarter, not least six Investec / Lowes 8:8 Plans.

It is worthy of note that of the above positively maturing plans, all but two generated a gain despite falling markets. All of these FTSE linked plans outperformed the FTSE total return over the same period, highlighting a fundamental benefit of structured products, particularly in flat, or falling markets.

Next quarter promises to be an interesting one – will pre-lockdown life continue to fall back into place? Will markets follow suit? Will we witness yet another successful period for the UK retail sector?

FTSE 100 data source: Investing.com Structured investments put capital at risk. Past performance is not a guide to the future.

Has your portfolio been missing something?

The latest 8:8 Plan, developed in collaboration with Mariana, maintains a defensive feature, though in a slightly different format. Full details on the latest plan, can be found here.

Disclosure of Interests: Lowes has provided input into the concept, development, promotion and distribution of the 8:8 Plan. The provider’s charges/fees are built into the terms of the investment - Lowes has a commercial interest in the 8:8 Plan as a result of its involvement in its development and promotion. All Plan returns are stated after allowing for the provider’s charges/fees. Where Lowes is involved in advice on or the intermediation of this investment to retail clients, it will not receive any payment from Mariana for its input.