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Ian Lowes says his structured research undermines IMA study

Lowes Financial Management says its research contrasting tracker funds with capital-at-risk structured products offers a fair comparison which undermines the IMA’s recent controversial study into the sector.

The IMA caused an outcry last week by releasing research which compared index trackers with National Savings & Investments guaranteed equity bonds. The IMA found tracker funds outperformed in nine out of 10 years and suggested its research “lays bare” the reality of many structured products.

But Ian Lowes says index trackers should have been compared with capital-at-risk structured plans to offer a fair comparison.

The IMA study prompted Lowes to undertake his own research comparing a leading index tracker, the HSBC global asset management FTSE 100 tracker launched in January 1995, with 40 structured product plans recommended by his firm which have matured after a five or six-year term. He found that 27 of the structured product plans would have outperformed the index tracker.

Lowes says people using the tracker rather than the structured product would have been an average £867 worse off on a £10,000 investment as the structured products returned an average of 40 per cent against 31.4 per cent for the tracker.

Chelsea Financial Services head of investments Matthew Woodbridge says: “It is a fair comparison to compare two capital-at-risk products. I would be interested to see a detailed IMA response.”

The IMA says it stands by its research but would not comment further.

To view the research, please click here.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. There’s lies, damn lies and statistics.

    I am pretty sure using the most beneficial timeline for the product you want to extol the virtues of will result in the outcomes you want.

    I always take past performance figures with a pinch of salt.

    I certainly always ask if a fund has made made a massive return over the last twelve months what did it do in the previous twelve months.

  2. Investors with 25 structured products (10 Meteor, 7 DRL, 5 NDF and 3 ARC) launched in the same period are 100% worse-off as the result of their plans failing just a few months later when Lehman collapsed. I bet they wish they had invested in a tracker fund….

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