FVC produced its first in depth report on structured product performance a year ago and we have now updated it to the end of 2019. We include all investment structured products on our database that have matured over the last four years (from 1 Jan 2016 to 31 Dec 2019) and compared them to some popular investment types that financial advisers often recommend to their clients.
The current investment climate is challenging and unpredictable despite some gains over recent years. Meanwhile, investors seem to become ever more demanding looking for capital protection, growth and income. It is in this tough environment that structured products have performed strongly yet again in 2019 with no investment products losing capital for the fourth year in a row.
The investment marketplace remains very crowded and regulations have increased significantly in the last few years with RDR, PRIIPs, MiFiD II and PROD all affecting the advice process. Therefore the ongoing service that FVC provides to assess the market combined with this important study help illustrate how compelling structured products continue to be for financial advisers and their clients.
We analysed products maturing in the four year period from 1 January 2016 to 31 December 2019, during which time there were a total of 1172 index based investment products (those linked to the FTSE-100 and other mainstream indices) maturing. These break down into 918 capital at risk product (78% of the total) and 254 capital protected products (22%) which serve the two parts of the market divided by the most fundamental investor choice – attitude to risking any loss of capital.
None of the 1172 structured products returned losses, and the average return was 7.24% p.a. for capital at risk products and 4.08% p.a. for capital protected products. The average over the entire set of products was 6.56% p.a.. These figures are remarkable and show how robust and reliable the market has been. It would be almost impossible to find any sector in any cycle from the fund world where every single one of over 1100 funds over a four year horizon would not have a single one losing money.
We believe these figures show a very strong case for the use of structured products in investor portfolios.
The full report can be accessed here.
Please contact us for permission to use this report for your adviser or professional clients
Research Structured Products