CompareStructuredProducts.com - 20/04/2022
Josh Mayne, Lowes Financial Management
The opening quarter of 2022 was another successful period for the UK retail sector, despite the sombre events unfolding in Ukraine and the associated financial sanctions imposed on Russia.
Throughout the period, the FTSE 100 Index remained flat and comparatively high. On 31st March 2022 the FTSE 100 Index closed just 1.8% above its 2022 opening level, reaching a peak of 7,672.4 on 10th February – approximately 200 points below the zenith of May 2018 (7,877.45). As the hangover from the Coronavirus market correction continued to ease, the average closing level of the Index throughout the three-month period was 7,443.95, reflecting an increase of 6.3% from the average level in 2021.
209 plans matured in Q1, with all 209 realising a gain for investors. The maturing plans achieved an average annualised return of 6.84% across an average term of three years.
|All Products||Lowes 'Preferred'||Not 'Preferred'|
|Number of maturing products||209||25||184|
|Number returning a positive outcome||209||25||184|
|Number returning capital only||0||0||0|
|Number returning a loss||0||0||0|
|Average total gain||21.81%||33.26%||20.26%|
|Average term (years)||3.05||3.68||2.97||Average Annualised Return||6.84%||7.96%||6.69%|
|Average Annualised Return Upper Quartile||9.26%||10.53%||8.99%|
|Average Annualised Return Lower Quartile||4.50%||5.28%||4.44%|
25 Lowes ‘Preferred’ publicly available plans matured in Q1, returning an average annualised return of 7.96% across an average term of 3.68 years – outperforming the sector average by 1.12%. Lowes ‘Preferred’ plans are those we view to be the best available at the time of issuance.
Not one maturing product failed to achieve a positive return for investors – a significant achievement in itself – though there were some standout performers…
1. Walker Crips UK & Europe Kick Out Plan Issue 2 (MS012). This plan, linked to the performance of the FTSE 100 Index and Euro Stoxx 50 Index, matured on its third anniversary triggering the return of investors’ original capital in full, in addition to a gain of 45%, or an annualised return of 13.17%.
2. Tempo Structured Products FTSE 100 FDEW Long Kick-Out Plan February 2019 - Option 3. This was also linked to the performance of the FTSE 100 Fixed Dividend Equal Weight Custom Index and matured on its third anniversary triggering the return of investors’ original capital in full, in addition to a gain of 44.25%, or an annualised return of 12.98%.
3. Meteor FTSE Semi-Annual Kick Out Plan July 2020. This plan, linked to the performance of the FTSE 100 Index, matured after one-and-a-half years triggering the return of investors’ original capital in full, in addition to a gain of 17.25%, or an annualised return of 11.16%.
The table below offers a performance summary of the plans most commonly held by our clients, that matured in Q1. Note that this table includes five plans that were developed in cooperation with Lowes Structured Investment Centre and five that were exclusively available to Lowes clients and as such are not included in the tables above. All were autocall / kick-out contracts linked to the FTSE 100 Index.
|Provider||Counterparty||Maturity Date||Plan Gain %||Term (Years)|
|Walker Crips||Société Générale||24/01/2022||16||2|
|Walker Crips||Société Générale||07/03/2022||16||2|
|Walker Crips||Goldman Sachs International||03/02/2022||24.5||3.5|
|Investec||Investec Bank Plc||10/02/2022||14.5||2|
|Walker Crips||Morgan Stanley||28/03/2022||24.5||3.5|
|Société Générale||Three UK banks||01/03/2022||27||3||Société Générale||Three UK banks||25/01/2022||28.5||3||Walker Crips||Morgan Stanley||03/02/2022||24.5||3.5|
|Mariana||Goldman Sachs International||21/02/2022||21.8||2|
|Investec||Investec Bank Plc||16/03/2022||14||2|
It is worthy of note that of the above positively maturing plans, all but one secured a gain significantly higher than the respective rise in the FTSE 100 Index during the term, emphasising a fundamental benefit of structured products, particularly in flat, or even falling markets. The one that did not return a gain in excess of the rise in the FTSE 100 Index commenced very close to the March 2022 market low, at a time when the protection afforded compared to a direct market exposed investment was no doubt very welcome. Along with all maturities, this plan performed exactly in line with the terms offered.
The sector has enjoyed a positive period in terms of maturities, and we look forward to the next three months for sustained positive performance. That said, Q1 witnessed inflation rise to its 30-year high in the UK (7%), further compounding the need for investment and the realisation of real returns to combat the erosive effects of inflation.FTSE 100 data source: Investing.com Structured investments put capital at risk. Past performance is not a guide to the future.