View more on these topics

IMA takes up challenge on structured v tracker

The Investment Management Association has accepted a challenge from IFA Ian Lowes to compare a portfolio of five structured products with a tracker of the IMA’s choosing over six years.

The move comes after the IMA released a report in April 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.

However, the research was met with anger by Lowes, Barclays and many others in the industry who said a better exercise would have been to compare tracker funds with capital-at-risk structured products.

The challenge will run from June 23 this year to the end of December 2017.

Lowes has chosen five products on the firm’s recommended list – the Morgan Stanley FTSE defensive digital growth plan 4, Morgan Stanley FTSE kick out growth plan 11, Gilliat growth multiplier June 2011 edition, Investec FTSE 100 geared returns plan 26 – option 2 and Meteor dynamic FTSE growth plan 2 – investment plan.

The IMA has selected the HSBC FTSE 100 index fund.

Where a structured product matures before the end date, it will be assumed that 10 days after its maturity the proceeds are invested in the HSBC tracker without any initial charge.

Commission of 3 per cent was also built into the terms of the structured products and 3.5 per cent in the case of the Investec plan. Therefore, an appropriate adjustment has been made in order to produce a fair comparison.

Lowes says: “It will take more than six years to conclude this challenge but we are extremely excited about seeing how it develops and we hope that you share our interest in what will be a fascinating study of real-time examples of investment performance.”

An IMA spokeswoman says: “The IMA accepted the challenge from Ian Lowes on the basis that it contributed to a healthy debate about structured products and funds.

“But it will not be possible to read too much into the result in 2017 as it is just one marketdependent example.”

Recommended

Price war looms for buy-to-let as lenders look to boost business

Buy-to-let specialists predict there could be a price war as lenders struggle to achieve lending targets with residential mortgages. Throughout July, The Mortgage Works, NatWest Intermediary Solutions and Skipton Building Society have reduced the rates on their buy-to-let products by 0.4 per cent, 1.4 per cent and 0.3 per cent respectively. Buy To Let Funding […]

Skipton BS advances in first half of 2011 up 409% year-on-year

Skipton Building Society advanced £717m in new mortgage loans in the first half of the year, a 409 per cent increase on the £141m advanced over the same period last year. Announcing its half-year performance today, the building society reported pre-tax profits of £6.3m for the first half of the year, compared to £21.7m in […]

Why the RDR must be delayed

The retail distrib-ution review comes into force on January 1, 2013. At about the same time, the successor to the FSA, the Financial Conduct Authority, will open its doors to business and will be responsible for regulation in the period following the implementation of the RDR. If the FCA was simply the FSA under a […]

Premier fund shows income success

Premier Asset Management says its multi-asset distribution fund is performing well for income investors at a time when inflation is a concern. The firm says anyone who bought the fund for income has seen impressive results even taking the financial crisis into account. Its multi-asset approach provides multiple sources of income, enabling the fund to […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment