Maximising Value Through Excellence
Structured investments are finally beginning to shake off their unwarranted reputation of being an unreliable and toxic addition to portfolios. At Affinity Capital, we're determined to educate and raise awareness of how structured investments work and what benefits they can bring.
So as we settle in to 2017, let's take a closer look at some of the reasons why you should consider structured investments as part of your wealth management strategy over the coming months.
The results for structured investments are now in for 2016, and they show another stellar year for the asset class. Figures from Lowes Financial Management, published in the Financial Times Adviser, revealed that nearly 90 per cent of products provided positive returns at maturity last year.
In 2016, returns were 5.48 per cent over an average term of 4.31 years.
Furthermore, almost 9 per cent returned investor capital, leaving just 2 per cent of structured investments – the equivalent of nine products – delivering a loss. The outcomes in 2015 were even better; 98 per cent of structured investments generated positive returns that year.
Lowes Financial Management also published the average annualised returns for capital protected, deposit-based and capital-at-risk structured investments. In 2016, returns were 5.48 per cent over an average term of 4.31 years, with capital-at-risk options offering slightly higher payouts at 6.62 per cent over 3.82 years.
Again, this was slightly lower than 2015 figures, where the five-year annualised return rate was 6.36 per cent. Nevertheless, the data shows structured investments still provide consistent and solid returns even if you prefer a more risk-averse approach.
Investors need strong market growth to ensure returns on equities, but structured investments often only require the underlying asset to be slightly above its initial level to secure the predefined gains at maturity.
More defensive structures are also available that provide returns at flat or even slightly falling markets, which could prove attractive at a time when volatility is an ever-present factor across the political and economic spectrum. Speaking of which …
Many people will agree that 2016 was a year that will be remembered for some of the most shocking political developments to occur in the 21st century. The EU Referendum in the UK saw Britons vote for Brexit, while Republican candidate Donald Trump upset the odds to become the US's 45th president.
With 2017 shaping up to be just as unpredictable, taking a long-term view on investments can help you avoid some of the immediate market volatility that could affect equities and other asset classes over the coming months. Some structured investments even have auto-call features that mean they can mature early if certain conditions are met.
Since the global financial crisis, regulators have forced banks across the world to improve their balances and ensure they avoid a repeat performance of the debacle that saw many institutions reliant on government bailouts to survive.
Structured investments offer defined returns with known maturity dates and the possibility of gains across a wide range of market outcomes.
The strengthening of regulation means counter-party risk is now minimised, and structured investments themselves continue to undergo more scrutiny to maximise transparency and ensure investors are educated.
Structured investments offer defined returns with known maturity dates and the possibility of gains across a wide range of market outcomes. In today's increasingly volatile economic environment, they can help you diversify your portfolio and guarantee capital protection.
If you are an institutional investor, family office or high net worth individual who would like to know more about adding structured investments to your wealth management strategy, we'd love to speak with you.
Contact Affinity Capital today to discuss your options.
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