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Review flags 2018 as “fantastic” year for structured products

7 February 2019

2018 was “fantastic for structured products” despite the wild swings seen across financial markets, according to Ian Lowes, managing director of Lowes Financial Management, the firm which produces the annual Structured Product Performance Review.

The review analysed the 381 structured products that matured in 2018. It found that not a single capital-at-risk product that matured in 2018 produced a loss. 23 products (6.04%) returned capital alone, while the remaining 358 (93.96%) generated positive returns, with an average 6.33% gain across the products.

For the majority of structured products, the FTSE 100 was the underlying measurement and accounted for 68% of maturities, with the EURO STOXX 50 and EVEN 30 among other linked indices.

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 said: “Despite significant volatility in markets in 2018, the last 12 months have been fantastic for structured products.

“Our own list of ‘Preferred’ plans delivered exemplary gains, with an average of 7.88% per annum over an average term of 3.4 years.”

The Review showed that among the best performing structured products in 2018 was Investec’s Dual Index Step Down Kick-Out Plan 9 (Investec Option). This gained 24.5% after 2 Years. Linked to the FTSE 100 and the EURO STOXX 50, it delivered an annualised return of 11.58%.

The Mariana 10:10 Twin Option FTSE Kick Out Plan, created in cooperation with Lowes Financial Management and launched in October 2015, was also among the top performers, with a gain of 37.5% after 3 Years, equating to an annualised return of 11.19%.

Ian Lowes said: “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.”

Lowes recently launched the Lowes UK Defined Strategy Fund investors, a collective fund which enables investment across multiple structured investment strategies, linked predominantly to the FTSE 100 Index, with no more than 10% credit exposure to any one bank.