An inaugural review of structured products complied by Structured Product Review and Lowes Structured Investment Centre has shown 98 per cent of structured products generated positive returns last year.
The UK market analysis also showed 424 products matured in 2015, with seven returning capital only, while just one product lost capital.
The research showed 80 per cent of the sectors’ maturing products are linked solely to the FTSE 100 index.
All 324 products linked solely to the FTSE 100 generated positive returns and the average term of all products maturing was 3.8 years.
Headline Data
|
2015
|
5 Year
|
|---|---|---|
Number of products
|
424
|
1,875
|
Number that generated positive returns
|
416
|
1,619
|
Number that returned capital only
|
7
|
214
|
Number that lost capital
|
1
|
42
|
Average duration/term
|
3.8 years
|
3.7 years
|
Average annualised return
|
6.8%
|
6.36%
|
Average top quartile annualised return
|
10.34%
|
11.54%
|
| Average bottom quartile annualised return | 3.75% | 0.72% |
Zak De Mariveles, chairman of the UK Structured Products Association, said the 2015 performance figures reveal the success of structured products in the UK, while the five-year data also emphasises that performance has been consistently positive over the longer term history of the research, including producing strong returns even when the underlying markets are not performing well.
Robert Bray, partner at Imperious Capital, said financial advisers tend to be influenced heavily by events of the past in decision making.
He said: “Various issues in the past certainly made us and some in our peer circle wary of embracing structured products – but we keep an eye on the sector, for signs of change, value and credibility.
“In an increasingly alien investment landscape, I do think as independent advisers we have a duty to be examining all options for our clients, diligently of course, and in the case of structured products not simply assuming that current offerings are simply a repeat of past offerings.”
Mr Bray added that it was inevitable that structured products are not suitable for all clients, however, it is implausible that they will be unsuitable for every single client of every adviser.
Lowes Structured Investment Centre is holding a webinar to present the review for professional advisers towards the end of February. - ftadviser
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