Structured Product Providers have been called to publish the maturity values of products and make the data more widely accessible. This information of performance and investment returns are NOT published in any accessible way. I have asked time and again, Why is this the case? I believe Structured Products’ maturity values should be published and be available. If it were ETFs, Investment Trusts, Collectives, Interest Rates on Savings Accounts or pretty much any other investment – results are available.
I can only question the performance and the results achieved. I can’t believe if the results were good that these details would not be shouted from the roof-tops by the product provider. I personally have grave doubts, especially when you factor in the use of financial instruments, such as, derivatives; counter-party risks and the varying terms offered by each product provider on an ongoing basis.
Maybe I’m just a bit cynical and these product providers are not hiding poor results but rather just don’t published their returns. Possibly this is to avoid the ability or need for either professional advisors (such as myself) or investors to better compare their past results and so create an opinion of the possible returns in the future.
Possibly, the view of these product providers is that an adviser, if not a direct and typically employed, sales force, will not sell the product after suffering the initial results, so it’s academic what that product returned – but I am now just speculating. I suspect that the details I require are not readily available because they are market-driven products – they are sold and my approach of professional reviews, assessments, advise and guidance, is not their market place.
The investment return is not the whole story with Structured Products, we must also consider the guarantee (if exists) and/or the level of protection. But, how much are investors paying for that guarantee?
The lack of product clarity means the costs are hidden in the returns, where past performance and results are not readily available. Although, I would say I am not anti structured products if these questions were answered. I am anti products where there is insufficient data to assess if they are effective, well structured and there is a realistic expectation for profit. What I need is much greater openness about what they deliver can, have and could deliver in terms of results.
The IMA released a study in 2011, which found almost all the tracker funds outperformed the structured products. It found the main reason the trackers did better was they reinvested their dividends, whereas the structured products did not.
Is The IMA Study Contentious?
The IMA study did not take into consideration of the risk profiles of the two investments.
There is a Need for Progress
There is a need for better dissemination of data on structured products. The lack visibility on maturity means that the results are almost product provider’s best kept secret. I cannot comment on why this is but uintil this data is available one must question the reasons for this secrecy.
I believe a central repository for values of maturing structured products would help transparency and enhance this investment class.
This could lead this investment product out of the gutter of sales pushed product into advice related planning.
Any questions, email me at firstname.lastname@example.org