Newspaper article The Journal (Newcastle, England)

Choppy Waters, Nervous Investors

Newspaper article The Journal (Newcastle, England)

Choppy Waters, Nervous Investors

Article excerpt

Byline: Ian Lowes

MARKET volatility can be quite an unnerving experience for investors as it can remind them of the potential instability of returns. The strategy of holding a range of investments which respond differently in varying scenarios and market conditions serves to mitigate some risk. That way, if one of the eggs cracks in your basket, it is not a complete disaster.

Attempting to find the panacea of a safe haven investment, to provide participation in stock market rises as well as protection from market volatility and long term market falls, is, for most, a futile task.

No investment of course is perfect, and the recent volatility in the gold price has proven that 'safe haven' investments have not been as valuable as the ill-informed often expect.

Diversifying with assets that provide uncorrelated market exposure is the mainstay of most investment managers, in terms of attempting to reduce risk but a more modern approach is to also include certain investments that provide simple, downside protection. If these same investments can also provide defined, geared, or amplified, exposure to market rises then even better.

Lowes Financial Management are recognised as experts in the use of structured products which are used alongside managed portfolios.

The fundamental concept behind these investments is, defined returns, delivered at defined dates, in defined market circumstances and they typically include a 'barrier' that dictates how far the market can fall before capital will be lost - usually, 40% or 50%.

Whilst the structure itself of these investments provide contingent downside protection this has been taken a step further with the introduction of defensive variations.

Defensive structured products offer the opportunity to make positive returns even in slightly falling market conditions.

While traditional structured products offer a gain if say, for example, the underlying measurement, say the FTSE 100, is higher in 2 years time, a defensive one might offer returns even if the FTSE falls by up to 5%.

Lowes has been building a wealth of experience in these investments over the years and have used structured products to generate attractive returns for clients, without taking on a signifi-cant amount of risk. …

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