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120 10:10 Maturities - 15/05/2024

Option 2 of the Mariana 10:10 Plan May 2018, a hurdle autocall successfully matured on its sixth anniversary date (07 May 2024) making it the 120th FTSE^ linked 10:10 Plan to mature, returning a gain of 63.9% being an annualised return of 8.56%.

With the first 10:10 maturity back in October 2018, the average annualised return for all 120 (single index linked) maturities is 8.52% over an average term of marginally more than 3 years.

All products 10:10 Plans*
Number of maturing products 1088 120
Number returning a positive outcome 1083 120
Number returning capital only 5 0
Number retruning a loss 0 0
Average total gain 18.08% 28.01%
Average term (years) 2.42 3.04
Average annualised returns 7.18% 8.52%
Avg. annualised returns upper quartile 9.43% 10.97%
Avg. annualised returns lower quartile 5.39% 6.55%
*10:10 Plans excluding 3 options of Dual Index 10:10 Plan April 2016

When we draw comparisons to the subsector (FTSE 100^ linked autocalls) since the first 10:10 maturity, we clearly see that the 10:10 outperforms on all accounts. What’s more, the best performing plans of the subsector on a total return basis were also 10:10 Plans.

Whilst there has been some degree of variation of the 10:10 over the years including the hurdle options reducing from a 10% to 5% hurdle and the replacement of the FTSE 100 with the FTSE CSDI the three now familiar options of the 10:10 Plan today are distinctly:

Option 1 – Step down from 102.5% in year two to 82.5% trigger level in year ten.

Option 2 – At the money throughout.

Option 3 – 105% hurdle throughout.

The recent resurgence in the FTSE 100 to all-time highs above 8,400 at the time of writing has provided hope that we may soon see the 10% hurdles from 2016 and 2017 mature with substantial, market beating returns. Obviously, the requirement for a 10% rise in the FTSE 100 meant that these plans had a longer expected potential duration from the outset however as with all autocalls a longer duration results in a snowballing coupon effect, which in this instance are 11% -12.5% for each year. At current FTSE levels all autocalls that are currently live to date will mature positively, long before their final observation date.

The 8,000 mark for the FTSE almost seemed as a psychological resistance for the last 20 odd years and with typical British “optimism”, who knows how long we will remain elevated above these levels. A 10% rise over 10 years realistically should be in the bag for positive maturity but we can look at early surrender prices that may be in the back of some investors’ minds. Looking at Option 3 of October 2017 which requires a FTSE level on 7th October 2024 of 8,275.16, at the time of writing this plan is in the money and will mature for a gain of 78.75%. With just under five months until the observation date it begs the question, should I cash out for 61.78%? (minus £200 encashment fee) rather than risk missing another kick out trigger and relying on the final three observations.

Of course, there is no crystal ball to predict what markets will do, we remain comfortable that this plan and all hurdle options of 10:10’s will mature positively. What the design of 10:10 plans do ensure are ample opportunities for positive maturity given their 10-year extended term.

Keep an eye out on for future issues of the 10:10 Plan.

^Includes FTSE 100 and FTSE CSDI linked

The FTSE CSDI was created specifically for structured products. It aims to closely replicate the performance of the same 100 companies, but after including the dividends – the equivalent to the FTSE 100 ‘total return’ index, from which, a constant annual dividend of 3.5% is deducted. The FTSE CSDI is very highly correlated to the FTSE 100 Index, and may therefore be expected to perform in a similar way to the FTSE 100 Index although, it would be expected to slightly underperform the latter if the total dividend yield transpires to be less than 3.5%.

Structured investments put capital at risk.

Past performance is not indicative of future results.

Disclosure of Interests:

Lowes has provided input into the concept, development, promotion and distribution of this Plan. The provider’s charges/fees are built into the terms of the investment - Lowes has a commercial interest in the Plan as a result of its involvement in its development and promotion. All Plan returns are stated after allowing for the provider’s charges/fees. Where Lowes is involved in advice on or the intermediation of this investment to retail clients, it will not be paid any fee from Mariana for its input. The aim of developing Plans in co-operation with providers, with Lowes input, is that they should be amongst the best available in the market. Lowes has robust systems and controls in place to ensure that it manages any actual or potential conflicts of interests in its activities.

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