Investments 

‘Structured products are hitting the mark’

The operations manager for Newcastle upon Tyne-based Structured Product Review said data from the past five years proved that the best 25 per cent of the structured deposits had an average annualised return of at least 7 per cent.

This was 5 per cent higher than the commonly-used three-month Libor rate, which is often used as a cash proxy.

He said that capital protected products linked to the FTSE 100 that have matured since 2008 provided a lower average annualised return of 2.6 per cent.

Mr Hughes said the figure seemed “fairly low” due to volatile activity in the FTSE 100 since the “vast majority” of the capital protected products were launched in 2004/2005.

He said this compared favourably to an average annualised return of 1.6 per cent in the FTSE 100 for investments for the equivalent term.

Mr Hughes added that the FTSE 100 had also never beaten the annualised return generated by digital, or ‘fixed’, growth products which typically provided an annualised gain of 6 per cent.

Ian Lowes, director of Newcastle upon Tyne-based Lowes Financial Management and founder of Structured Product Review, said: “Many clients who held structured products in the past five years valued the fact that they knew they would get their capital back during a time when the FTSE 100 plunged and exposed investors to massive drops in their returns.”

Background

Morgan Stanley revealed that 95 per cent of the adviser market uses, or had used, structured products.

A quarter of respondents who took part in the poll for Morgan Stanley said they had received fewer complaints on structured products than they had for other investments.