Structured Product 

IFA beats trade body in structured product challenge

IFA beats trade body in structured product challenge

An IFA has successfully challenged the Investment Association on its review of structured product performance.

The former Investment Management Association, now the Investment Association (IA), published research in 2011, that portrayed structured products in a bad light based on performance, claiming tracker funds were a better alternative.

The research, entitled 'Investment Returns from Tracker Funds and Guaranteed Equity Bonds', compared a HSBC FTSE 100 tracker fund with NS&I Guaranteed Equity bonds and found in nine out of 10 years the tracker would outperform the structured product.

But believing the comparison was not wholly appropriate, advice firm Lowes and other organisations, such as Barclays bank, which at the time felt structured products were being portrayed in an unfair way, put forward research based on past performance data.

This, the advice firm said, showed a very different story.

Lowes Financial Management - run by Ian Lowes, who also runs the Structure Product Review website to research the investments - offered the IA a friendly challenge in which it pitted a portfolio of five structured products of its choosing against a low-cost tracker selected by them. 

At conclusion of the challenge, in December 2017, the tracker had risen by 62.55 per cent net of fees while the Lowes portfolio had risen by 81.11 per cent. 

The Investment Association conceded defeat and in turn made a contribution to one of Lowes' supported charities, the IFA said.

Mr Lowes said: "We agreed with the new chief executive of the IA, Chris Cummings, that we would convert the champagne into a charitable donation.

"While the wager was made as a sporting challenge, we see it as a great fillip that as an independent financial advice firm we were able to prove not only the value of structured products – and the flaws in the IMA's report – but verified our own knowledge, skills and experience in selecting structured products."

carmen.reichman@ft.com