Structures offering full or partial capital protection lost almost 12% in market share in 2021.
Publicly distributed structured products that put full capital-at-risk claimed their highest market share in five years in the UK.
An estimated GBP750m (US$1 billion) was invested in 439 structured products that offered zero protection – the equivalent of an 80.1% share of the UK market, the highest since 2017 and an increase of 11.9% year-on-year (2020: GBP595m from 325 products).
The previous high was five years ago, when capital-at-risk products captured 90% of the UK market.
Average sales volumes, at GBP1.7m per product, remained stable (2020: GBP1.8m).
The vast majority (342 products) were autocallable plans linked to single indices, including the FTSE 100 (248), the FTSE 100 Equal Weight Fixed Dividend Custom Index (49) and FTSE Custom 100 Synthetic 3.5% Fixed Dividend Index (35), while most of the remaining products were worst-of structures, either linked to a basket of shares (57) or a basket of indices (37).
Walker Crips was the main distributor, collecting an estimated GBP200m from 99 products while Barclays Bank was the number one issuer for capital-at-risk products (GBP125m from 66 products).
Structures offering 100% capital protection saw their market share decrease to 13.1%.
Some GBP122.5m was collected from 44 such products in 2021, compared to GBP204m from 62 products the previous year. Average sales volumes, at GBP2.8m for 2021 versus GBP3.3m for 2020, were also down.
Payoffs were mainly digitals while underlyings were once again dominated by FTSE 100 (38 products). There was also a deposit linked to the Solactive Climate Change Europe BTI PR Index, which was debuted by Causeway/Barclays in 2021.
Investec, despite halting the issuance of retail structured product plans from April 2021, was the most active provider.
The next category, that of products providing a capital return of above 100%, captured 6.4% of the market (2020: 8%).
The 11 products in total were all digitals on the FTSE 100 that were issued by Santander. They included issue 27 of the bank’s Defined Return Plan, which was the best-selling product of the year with sales of GBP39.4m.
Finally, two products, both distributed via Idad in collaboration with Goldman Sachs, offered to return at least 95% of the nominal invested. Their market share was marginal (0.4%).
Main image: Kings Church International/Unsplash.