InvestmentsFeb 26 2014

Structured products deliver healthy returns

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A 14-page study produced by, the specialist research firm run by Newcastle-based Lowes Financial Management, said 87 per cent of products have made a profit, net of fees.

It found that the top-quartile FTSE 100 plans, which matured last year, generated annualised returns of 11.82 per cent.

Structured products in the ‘capital at risk’ category were the best performers, maturing with an annualised return of 8.9 per cent last year. Capital-at-risk products in the bottom quartile still made average returns of 5.05 per cent.

The capital-at-risk product that generated the best return was the Investec FTSE 100 Accelerated Growth Plan 4, returning nearly 108.9 per cent in total.

According to the study, the worst performing product, the Barclays Six-Year FTSE Super Tracker (Issue R3), still gave investors their capital back, net of fees, despite the market falling by almost 2 per cent from the starting index level during the six-year term.

Auto-call products, which made up nearly half of maturing plans in 2013, also performed positively, returning 8.8 per cent across an average term of 2.1 years.

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The term ‘capital protected’ can easily be misunderstood by savers to mean that capital will always be safe, despite improved efforts of the industry and regulators to describe counterparty risks.