Structured Products Annual Performance Review 2020

UK Structured Products Sector Maturity Analysis Covering all intermediary distributed products that matured in 2019

Welcome to Lowes Financial Management’s Annual Performance Review 2020, 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 7,000 investments – to provide accurate, objective analysis and let the gures speak for themselves. Whilst markets in 2019 proved tricky to navigate and at the year end the FTSE 100 index, to which two thirds of plans are linked, was at approximately the same level it was at two years earlier, it was yet another successful year for retail structured products. The sector did, however, have some higher risk, share-linked plans mature returning losses, as a result of the underwhelming performance of a select few individual shares to which these plans were linked. Thankfully this represented only four of the 334 maturities that occurred during the year. I am, yet again, delighted that the Lowes selection process for ‘Preferred’ plans proved its worth with the ‘Preferred’ plans that matured (71 of the 334) outperforming their respective sub-sector averages in almost all instances, delivering an average annualised return of 7.22% over an average term of 3.68 years. The average top quartile return of these ‘Preferred’ plans was 9.60% and the lower quartile return was 4.77%. The maturity results particularly showcase the strength of autocallable structured products which represent more than half of all maturities. The most prevalent of all product maturity shapes was capital at risk autocalls linked solely to the FTSE 100 Index. These delivered average annualised returns of 7.41%. In 2019, we were proud to showcase a longer-term review of the sector, looking at both maturity and issuance of products over the ten years following the nancial crisis. We are glad that the review was well received and are grateful to all of the named plan managers in the report who generously sponsored its production by contributing to Macmillan Cancer Support. To obtain a copy of Lowes Structured Product 10-year review please visit: www.Lowes.co.uk/our-thinking/10-year-review With structured product investors having been so well served, there is a lot for providers and distributors to be proud of. Sadly, myths and misunderstanding have meant that many retail investors have not been in a position to enjoy the bene ts and returns the sector has

produced but with a raft of evidence, such as that contained in these sector reviews, we believe the tide is slowly turning. The UK retail sector has now evolved to provide a regular supply of predominantly straightforward, competitive solutions, with easy to understand outcomes, o ering attractive potential returns linked solely to the FTSE 100 Index and as such, warrants proper consideration by all independent investment advisers. All of us here at Lowes hope that you will nd the analysis this review provides thoroughly informative. Here’s to another year of success and looking forward to what the new decade may hold. Ian Lowes Managing Director Lowes Financial Management Limited Published January 2020