Max Darer, Lowes Financial Management (05/10/2022)

Q3 2022 saw a turbulent time for global markets, let alone the FTSE 100. The Index opened the quarter at the level of 7,169.28 and finished 3.84% lower at 6,893.81. Throughout this period are the index peaked at 7,578.85 and had an average closing level of 7,296.25, providing good conditions for favourable maturities.

130 plans matured in Q3, with all but 4 realising a gain for investors - the remaining 4 plans returned the original capital in full, albeit with no additional gain. Consistent with Q1 and Q2 2022, no maturities in Q3 realised a capital loss.  

Collectively, the maturing plans earned an average annualised return of 6.09% over an average term of 3.36 years. 

 

All products

Lowes ‘Preferred'

Not 'Preferred'

Number of maturing products

130

21

109

Number returning a positive outcome

126

21

105

Number returning capital only

4

0

4

Number returning a loss

0

0

0

Average total gain

21.23%

29.77%

19.58%

Average term (years)

3.36

3.77

3.28

Average annualised returns

6.09%

7.32%

5.85%

Annualised returns upper quartile

8.6%

9.6%

8.23%

Annualised returns lower quartile

3.62%

4.83%

3.37%

All product data sourced from StructuredProductReview.com.

Of the 130 matured plans, 21 were marked as Lowes ‘Preferred’, representing those we viewed to be the best available at the time of issuance. All 21 of the Lowes ‘Preferred’ plans matured with a gain, returning an average annualised return of 7.32% over an average of 3.77 years – outperforming the sector average by 1.23% pa.

The four plans that returned original capital only were deposit based, linked to the performance of either the FTSE 100 Index or the Even 30 Index.

Counterparty

Maturity Date

Term

(Years)

Index Link

Initial Index Level

Final Index Level

Index Movement

Investec Bank Plc

18/07/2022

5

EVEN 30 Index

2,222.63

2,154.18*

-3.08%

Investec Bank Plc

29/07/2022

3

FTSE 100

7,686.61

7,320.54**

-4.76%

Investec Bank Plc

22/08/2022

5

EVEN 30 Index

2,219.74

2,141.13*

-3.54%

Investec Bank Plc

16/09/2022

3

FTSE 100

7,321.41

7,307.3**

-0.19%

* - Subject to averaging over the final six months. ** - Subject to averaging over the final three months.

The best five performing plans by annualised return are summarised below.

Provider

Counterparty

Maturity Date

Investment Term

(Years)

Index

Link

Final Gain

Annualised Return

Hilbert

Citigroup

16/08/2022

1

3 FTSE 100 Shares

15%

15%

Mariana

Goldman Sachs

23/08/2022

3

FTSE 100 Index

43.2%

12.7%

Hilbert

Citigroup

16/08/2022

1

3 FTSE 100 Shares

10%

10%

Meteor

HSBC

13/09/2022

3

FTSE 100 Index

Euro Stoxx 50 Index

32%

9.69%

Mariana

Goldman Sachs

15/08/2022

2

FTSE 100 Index

20%

9.53%
 
 

Two of the three best performing plans were share linked, offering annual coupons of 15% and 10%, and ultimately rewarding investors for the greater degree of risk taken. However, it is noteworthy that all six plans to mature with a loss in 2021 were linked to the performance of a basket of underlying shares, reinforcing the enhanced risk of such investments.  

The two maturing plans linked solely to the FTSE 100 that featured in the top five were 10:10 Plans.  The exceptional performance of all 10:10 Plans to mature to date can be found here. 

The terms of the current issue of the 10:10 Plan can be found here.

As we look forward to the next three months, it may not be unreasonable to assume a cautious outlook for what markets may do. Nonetheless, this stresses the importance of our philosophy that through extended maximum investment terms, sufficient end of term capital protection barriers and defined returns in flat or falling markets, structured products can provide a degree of reassurance welcomed now more than ever.

Past performance is not a guide to the future.

Structured investments place capital-at-risk.

FTSE data sourced from Investing.com.

Disclosure of interests: Lowes has provided input into the concept, development, promotion and distribution of the 10:10. Lowes has a commercial interest in these investments as a result of its involvement. Where Lowes is involved in advice on these investments to retail clients, it will not receive benefit of any fees for its involvement, other than those fees payable by the client to Lowes.