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Structured Products

How to get returns in a falling market

Steven Graham
21st January 2016

At the end of 2013 we announced the release of an innovative “Autoput” structured product. It was the first product available for UK retail investors specifically designed to offer a return in bearish markets. It offered the opportunity of a return to be paid if both the UK FTSE 100 and the German DAX were below the strike levels set in January 2014 on one of the plan’s annual observation dates. Capital was only put at risk if one of either the FTSE 100 or the DAX was up by more than 50% on the Plan’s maturity.

To recap, the Plan offered investors a potential coupon of 8.25% per annum based on the performance of two indices, the FTSE™100 and the DAX®. In contrast to a standard Kick Out or Autocall plan the Autoput plan was constructed to pay a coupon if both of the underlying indices closed at or below their start level on any one of the Plan’s six annual observation dates.

Mariana’s view was that the Mariana Autoput had its place in a diversified investment portfolio, alongside other long-market focused products, such as the more familiar long only products – Autocalls and Supertrackers. It offered investors a return when markets fell and was a natural hedge for investors who are naturally long and will therefore see a decline in the value of their portfolio if markets fall.

On the Mariana Autoput’s second observation date in January 2016, with global equity markets widely lower, the Plan has kicked out paying investors £116.50 for every £100 invested over 2 years (a return of 8.25% pa). The early maturity of the Plan means investors are now in cash and can if they wish invest back into the market at a significantly lower cost than when they bought Mariana’s Plan.

We believe this demonstrates the rationale for investors to allocate a portion of their portfolio to these types of investment, and we at Mariana continue to look actively for innovative opportunities which will create real value for investors.

Mariana’s view at present is that after the recent equity market sell-off, now is not the time to launch a new version of the Mariana Autoput. However, investors who wish to take advantage of the opportunity to make use of the current depressed market levels and get upside exposure to the market might consider another of Mariana’s ground breaking products (developed in association with LSIC) for the structured investments arena. The Mariana 10:10 Plan is the first 10 year autocall structure available for UK retail investors and, by extending the product term, it offers investors both a market leading rate of return and enables participation in more auto-call opportunities than a traditional kick out product offers. The back testing on the Mariana 10:10 Plan is extremely strong and strengthens the appeal of this unique and innovative offering available to the UK retail market.

Mariana offered an innovative hedge against the markets which worked well to help balance a client’s portfolio. To be able to give the good news to clients of a 16.5% return over the last 2 years in the current climate was great for all parties concerned.”

Tony Earl, DipPFS, Certs CII(MP & ER)
Senior Independent Financial Adviser
Equitas Financial (UK) Ltd

If you have any questions or would like to discuss these products in more detail, please call the Mariana sales team on 0207 065 6699.


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