Interactive Investor

Structured products shine during volatile times

17th January 2019 10:11

Kyle Caldwell from interactive investor


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Research has found no structured products distributed by UK intermediaries matured with a loss last year.

No structured products distributed by UK intermediaries matured with a loss last year, research has found.

According to Lowes Financial Management, which analysed the 381 structured products that matured in 2018, not a single ‘capital at risk’ product that matured in 2018 produced a loss, despite the wild swings seen across financial markets.

In total, just 23 products (6.04%) returned capital alone, while the remaining 358 (93.96%) generated positive returns, with an average 6.33% gain across all structured products. Of the 23 products that did not return a gain, all but two were deposit-based or capital-protected contracts and they were, with one exception, linked to measures other than mainstream indices.

Ian Lowes, managing director of Lowes Financial Management, says: “Despite significant volatility in markets in 2018, the last 12 months have been fantastic for structured products. It is great to see the sector continuing to deliver.”

Among the best-performing structured products last year was Investec’s Dual Index Step Down Kick-Out Plan 9 (Investec Option). Linked to the FTSE 100 and the EURO STOXX 50, it delivered an annualised return of 11.6%.

The Mariana 10:10 Twin Option FTSE Kick Out Plan, created in cooperation with Lowes and launched in October 2015, was also among the top performers, with a gain of 37.5% after three years, which equated to an annualised return of 11.2%.

Lowes adds: “Once again we have seen some standout performers in 2018, but without a doubt the biggest achievement for the sector is that our 'Black Hole' award, given to the worst structured product to fail investors, was empty this year as no products produced a loss.  This is the first time this has happened.”

As Money Observer pointed out in the October 2018 edition of our magazine, structured products have their merits and demerits, but at a time when stock and bond markets look largely unattractive, they are an option to consider. That’s particularly the case for income-seekers keen to bring some clarity to when, and in what circumstances, income will be paid, which is why structured products have a useful role in a diversified portfolio.

This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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