Structured Products Annual Performance Review 2019

UK Structured Products Sector Maturity Analysis Covering all intermediary distributed products that matured in 2018

Welcome to Lowes Financial Management’s Annual Performance Review 2019, a rich and comprehensive overview of the retail structured product maturities of the past year. Each January we analyse our extensive database – which now extends to over 6,500 investments – to provide accurate, objective analysis and let the gures speak for themselves. Whilst markets in 2018 were signi cantly more volatile than the preceding year, it proved to be a tremendous year for structured products, with not one retail structured product maturing with a loss. Take a moment to appreciate what that means and contemplate how many other investment sectors could boast the same.

The number of maturing structures in 2018 was however, almost half that of the number maturing in the previous year and whilst that should not detract from the results it is acknowledged that this re ects a much ‘cleaner’ retail sector with the majority of plans exposed to mainstream indices.

Again, I am delighted that the Lowes selection process for ‘Preferred’ plans proved its worth with every ‘Preferred’ plan maturity delivering a gain with the average annualised gain being 7.88% over 3.4 years. The maturity results include the returns from the rst three issues of the 10:10 Plan, which were created as a cooperation between ourselves and Mariana Capital. The 10:10 Plan, autocall format increases the number of potential opportunities for positive outcomes, whilst repositioning market risk through extending the maximum terms to ten years. It is pleasing to note that since their introduction in 2015 many other providers have now accepted the Lowes logic, to the extent that terms beyond the traditional six-year maximum are now commonplace.

We are delighted to note that for the rst issues of the 10:10 Plans, the extended terms have not proved necessary. In the fourth quarter of 2018 all eight options of the rst three tranches matured at their rst opportunity, returning on average 8.75% per annum over three years.

With structured product investors having been so well served, there is a lot for providers and distributors to be proud of; all of us in the Lowes Investments Team hope that you will nd the analysis this review provides thoroughly informative. Here’s to another year of success.

Ian Lowes Managing Director Lowes Financial Management Limited

Published January 2019