Data shows strong structured product performance

Investec Structured Products says cash savers have been dramatically losing out in recent years as structured deposits have far outperformed savings bond rates since 2010, delivering average annual returns of 6.3 per cent.

Investec’s kick-out deposit returns were 2.35 per cent higher than the average 5-year fixed-rate deposit available in the UK between March 2009 and March 2014 although investors’ funds were locked away for less than half this period, at 1.8 years on average across the 42 plans.

Its research found that investors with maturities after one year received 6.9 per cent on average, rising to 12.12 per cent over two years and 19.05 per cent over three years.

The returns come at a time when some 63 per cent of investors, according to Investec, think that 3 per cent is a reasonable return for a cash deposit.

Investec’s products had a maximum term of five years with the potential for early maturity based upon the performance of the FTSE100 index.

Kick-out plans usually have an investment term of five or six years but they can mature or ‘kick-out’ before their maturity date, as long as the underlying index meets its pre-defined criteria at specified points within the plans duration.

Gary Dale, head of intermediary sales at Investec Structured Products, says: “Low interest rates would appear to be with us now for the foreseeable future so it is perhaps time for investors and advisers to sit up and seriously look at the benefits structured deposits have as real alternatives to cash savings rates and fixed rate bonds.”