Again with reference to a low returns environment, at a time when advisers and investors are increasingly concerned about the challenges of the environment ahead, including structured products in a portfolio can help better diversify and balance a portfolio, in terms of the types of investments, for example, active, passive, smart beta and structured products.”
Richard Harry, director at Best Price Independent Financial Advisers, says: “We have used structured products - along with structured deposit plans - within client portfolios for many years, diversifying investor’s portfolios further in ways that simply cannot be achieved through asset class, sector and geography allocation.
"We use a combination of active and passive fund solutions, including discretionary fund managers as part of a risk based (volatility metric) investment programme for our clients.
"We recognise the relative merits of each, but also the limitations of solutions in isolation, where advisers are limiting their clients investment exposure and not considering quality structures. The investment results against flat, or falling markets with defensive barriers have been strong and at low cost."
He adds that a multiple of factors have to be considered, but most importantly, the focus is on “diversity, quality and suitable outcomes for investors, so the use of the best quality plans is a must in our view”.
Adviser sentiment
Still, not all advisers have been enamoured with the returns.
Scott Gallacher, chartered financial planner at Rowley Turton says: “Historically they have a place for more cautious clients or as a cautious element of a balanced portfolio.
"More recently, the lower returns of these types of products, due in part to lower interest rates, has resulted in us using them less than we would have done previously.”
“We tend to favour structured deposits over structured products due to the additional protection and security that structured deposits offer. This approach is partly due to the observation of historic failures on the structured product side. Though fortunately we avoided all of those failures ourselves.”
