Structured products investors in Germany saw the performance of their investment portfolios ‘strongly influenced’ by this year’s headwinds in the domestic equities market, where the German blue-chip index Dax lost 13% of its value this year, according to the Deutscher Derivate Verband (DDV) November survey.
Despite the market downturn, 30% of respondents managed to make gains year to date, with 20% gaining over 6% in their portfolios and 11% indicating that the value of their portfolio increased between 1% and 6%.
“This is clearly related to the deteriorating sentiment on the capital markets,” said Lars Brandau (pictured), managing director at the DDV. “While stock exchanges have been almost continuously on an upward trajectory over the past few years, this year's move was sideways, then (rapidly) down. The leading index DAX has lost (as of today) more than 10% at the beginning of the year.”
Compared to last year, the percentage of self-directed investors gaining over 6% in their portfolios decreased from about 53% to 20%.
“In recent years, it has been comparatively easier to generate positive returns,” said Brandau, pointing that it should be noted that not all of the more than 4,300 participants in the DDV survey hold only structured securities in the portfolios. “In the end, it is only possible to perform well in weak markets with the help of good allocation and structured securities.”
The reason why 49% of the respondents indicated a loss of more than 6% so far this year, compared to last year’s 16% is due to the performance of the capital markets, according to Brandau.
“All asset types have influenced the portfolio of self-directed investors so far this year,” said Brandau. ‘[German investors] have for some years developed a taste for low-cost ETFs. But it is precisely these products that make it very clear that only when the underlying indices are rising can performance be achieved. An argument for the use of structured securities is that they can also generate positive returns in falling markets. This is precisely why the use of investment certificates and / or leverage products as an admixture is so valuable.”
The DDV online poll is based on 4,343 responses from German self-directed investors, and was conducted in cooperation with the finance portals Ariva.de, finanzen.net, finanztreff.de, Guidants, OnVista and wallstreet online.de.