Structured products produced strong returns for investors in 2022, despite the economic downturn, a new report from Lowes Financial Management shows.
Among a total of 632 structured product maturities in the market, 622 plans returned gains, while the remaining 10 were deposit-based plans which returned the original investment. There were no reported capital losses during the year.
The 632 maturities produced an annualised return of 6.44%, with an average investment term of 3.25 years, an increase of 0.24% from 2021.
Lowes, which analyses the performance of all structured products and data covering more than 8,500 plans, also identifies “preferred plans” – those they consider to be the best available on the market at the time of launch.
According to the group, 96 of the 632 maturities were identified as ‘preferred’ and outperformed the sector and subsector averages in every category, producing an average annualised return of 7.82%
Max Darer, investment technician at Lowes Financial Management, said: “After the pandemic and two unpredictable years, many investors had hoped for a quieter, more stable period. However, 2022 proved to be anything but with the unfolding war in Ukraine, supply chain problems, a surge in inflation and the merry-go-round in Downing Street.
“Despite significant market volatility throughout 2022, market positions have been such to trigger a continued high level of autocall maturities.”
Darer said it was “particularly striking” to see that 100% of capital at risk structured investments maturing last year returned a gain for investors, with an average annual return of 6.87%.
“All things said and done, 2022 was another extremely positive year for the sector and those investors who took advantage of it,” Darer added.
Ian Lowes, managing director of Lowes Financial Management, said the findings showed that the UK retail structured product sector “continues to shine” and will come to attract more investors going forward.
“A significant number of advisers and investors have thus far missed out on what the sector has to offer. Results like these cannot be dismissed. We believe that the tide is slowly turning with more people becoming aware of the quality propositions the sector has to offer.
“Using investments which can offer defined returns and help protect against falls in the market can complement the funds and other investments in a portfolio, helping to diversify the risk return profile.”
