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Q3 2022 Maturity Results - 05/10/2022

Max Darer, Lowes Financial Management

Q3 2022 saw a turbulent time for global markets, let alone the FTSE 100. The Index opened the quarter at the level of 7,169.28 and finished 3.84% lower at 6,893.81. Throughout this period are the index peaked at 7,578.85 and had an average closing level of 7,296.25, providing good conditions for favourable maturities.

130 plans matured in Q3, with all but 4 realising a gain for investors - the remaining 4 plans returned the original capital in full, albeit with no additional gain. Consistent with Q1 and Q2 2022, no maturities in Q3 realised a capital loss.

Collectively, the maturing plans earned an average annualised return of 6.09% over an average term of 3.36 years.

Q3 2022 maturity results. Source:
All Products Lowes 'Preferred' Not 'Preferred'
Number of maturing products 130 21 109
Number returning a positive outcome 126 21 105
Number returning capital only 4 0 4
Number returning a loss 0 0 0
Average total gain 21.23% 29.77% 19.58%
Average term (years) 3.36 3.77 3.28
Average Annualised Return 6.09% 7.32% 5.85%
Average Annualised Return Upper Quartile 8.6% 9.6% 8.23%
Average Annualised Return Lower Quartile 3.26% 4.83% 3.37%

Of the 130 matured plans, 21 were marked as Lowes ‘Preferred’, representing those we viewed to be the best available at the time of issuance. All 21 of the Lowes ‘Preferred’ plans matured with a gain, returning an average annualised return of 7.32% over an average of 3.77 years – outperforming the sector average by 1.23% pa.

The four plans that returned original capital only were deposit based, linked to the performance of either the FTSE 100 Index or the Even 30 Index.

Counterparty Maturity Date Term (Years) Index Link Initial Index Level Final Index Level Index Movement
Investec Bank plc 18/07/2022 5 EVEN 30 Index 2,222.63 2,154.18* -3.08%
Investec Bank plc 29/07/2022 3 FTSE 100 7,676.61 7,320.54** -4.76%
Investec Bank plc 22/08/2022 5 EVEN 30 Index 2,219.74 2,141.13* -3.54%
Investec Bank plc 16/09/2022 3 FTSE 100 7,321.41 7,307.3** -0.19%

* - Subject to averaging over the final six months. ** - Subject to averaging over the final three months.

The best five performing plans by annualised return are summarised below.

Provider Counterparty Maturity Date Investment Term (Years) Index Link Final Gain Annualised Returns
Hilbert Citigroup 16/08/2022 1 3 FTSE 100 Shares 15% 15%
Mariana Goldman Sachs 23/08/2022 3 FTSE 100 Index 43.2% 12.7%
Hilbert Citigroup 16/08/2022 1 3 FTSE 100 Shares 10% 10%
Meteor HSBC 13/09/2022 3 FTSE 100 Index & Euro Stoxx 50 Index 32% 9.69%
Mariana Goldman Sachs 15/08/2022 2 FTSE 100 Index 20% 9.53%

Two of the three best performing plans were share linked, offering annual coupons of 15% and 10%, and ultimately rewarding investors for the greater degree of risk taken. However, it is noteworthy that all six plans to mature with a loss in 2021 were linked to the performance of a basket of underlying shares, reinforcing the enhanced risk of such investments.

The two maturing plans linked solely to the FTSE 100 that featured in the top five were 10:10 Plans. The terms of the current issue of the 10:10 Plan can be found here.

As we look forward to the next three months, it may not be unreasonable to assume a cautious outlook for what markets may do. Nonetheless, this stresses the importance of our philosophy that through extended maximum investment terms, sufficient end of term capital protection barriers and defined returns in flat or falling markets, structured products can provide a degree of reassurance welcomed now more than ever.

FTSE 100 data source:

Structured investments put capital at risk.

Past performance is not a guide to the future.

Disclosure of interests: Lowes has provided input into the concept, development, promotion and distribution of the 10:10. Lowes has a commercial interest in these investments as a result of its involvement. Where Lowes is involved in advice on these investments to retail clients, it will not receive benefit of any fees for its involvement, other than those fees payable by the client to Lowes.
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