Joshua Wynn - 03/04/2019
It is customary among many new members of our team to write a piece on their initial general impressions of the structured investments in which we specialise, usually extolling their virtues and elegant design (which really are not so hard to understand once you begin to speak the language). It has been a while since I joined this merry band, so have missed the boat as far as a wet-behind-the-ears article goes. However, my imminent departure does present the opportunity for a slightly more wizened perspective, so let’s go with that.
Previous pieces have often followed an apologetic vein of argument: sure, structured investments have a reputation for complexity, but if a beginner can get it, surely, they aren’t so opaque after all? Even in my meagre experience, structured investments have still been a prodigal son of finance. It is not necessary to contextualise too much here – structured investments have been around long enough for most people with an interest in finance to become acquainted, or at least read someone else’s opinion about them and take that on board.
In essence, I see no reason to justify the reticence on the part of many to view the merits of structured investments objectively. Lowes Financial Management recently produced a report which identified that not one maturing retail UK structured investment returned a loss to investors in the whole of 2018, but an average annualised return of 6.33%; indeed, an upcoming review of the decade since 2009 shows that over that period structured investments have gone from strength to strength, becoming increasingly transparent and better-regulated with the passage of time.
Accepting the adage about past performance, on average, structured investments have outperformed direct holdings in comparable indices and structured deposits offer the potential for considerably greater returns than the slim pickings of fixed-term bank deposits; they are mostly limited to links with established stock market indices such as the FTSE 100 Index; there is a range of counterparties available, from HSBC to the Royal Bank of Canada, increasing opportunities for diversification.
All of the above is verifiable information, freely available to professional and consumer audiences alike and those who disregard them deny both themselves and those whom they advise on such matters from accessing valuable opportunities on principle – a noble term often misused in defence of folly.
I joined Lowes Financial Management in 2017 as a blank slate, having taken an English degree at university, finance was very much a new world. I have learned a lot about the world of investments and can say with a good degree of certainty that once I have made my fortune (watch this space), I’ll put it to work in a portfolio that includes structured investments. What better testimony could you get than that?
In order to earn those beans, however, I will first be embarking on a career in the Royal Navy. Although it is with a heavy heart that I leave the Structured Products team behind, I am sure they will continue to provide a great service without me, although whether they will be able to maintain production of such Avant Garde article content remains to be seen.