Market Analysis: A Powerful Story for Structured Investments

By SIMON

SIMON is a financial technology platform focused on changing the wealth management experience for financial advisors. That focus relies on our ability to deliver not only education, marketplace, and lifecycle management for the risk-managed products on our platform, but also market analysis when it matters most. The current market is extraordinarily unique, and much like the rest of the financial world, we’ve been keeping an eye on the products on our platform to gauge performance and support financial advisors as they manage portfolios through continually shifting market conditions.

Our team ran an intrinsic value analysis of the 25,000+ live structured investments on our platform that have traded since 2012, but have not yet matured, to see how they are performing through this period of market volatility. As anyone would imagine, the reference underlier has a negative return in 88% of the products since they traded (as of the March 20, 2020 close); however, the embedded risk- management features of these products illustrate an interesting picture when you look more closely:

Based on the current performance of the underliers, intrinsic values of the 88% of products with negative returns show the outperformance available to client portfolios. If the products were to mature with their respective underliers at current levels:

48% would have full return of principal, despite drops in the underliers up to -87%, due to features offering full protection or sufficiently large buffers
24% would have some loss in principal, but outperform an investment in the underlier itself, due to buffer features that offer partial protection
6% would have gains in value despite a drop in the reference underlier, due to an absolute return feature
22% would have losses in line with those of the reference underlier, due to the underlier’s decline below a knock-in barrier or lack of a buffer feature

Representing a significant cross-section of the overall structured investment market, this data illustrates valuable performance insight and underscores why financial advisors leverage structured investments to provide true portfolio protection for their clients. Risk-managed solutions like structured investments can help tailor exposure and embed protective features that are otherwise unavailable through direct investments in stocks or indices.

Want to learn more about managing portfolio risk with confidence? If you’re a financial advisor, contact us for a demo and if you’re an investor, ask your financial advisor about SIMON. Be sure to follow us on LinkedIn, Twitter, and Instagram to stay up to date.

SIMON is a cloud-based platform for risk-managed solutions, supporting fully informed decisions, active management, and the ability of financial advisors to support the needs of their clients, especially during market volatility, when clear and more frequent communication is paramount.

You can also learn more about structured investments and other risk managed solutions with articles and videos available on simon.io/engage

Product Count: The number of structured investments corresponding to the applicable Underlier Return level and Intrinsic Value level.
Underlier Return: For a given structured investment, the difference between the Underlier’s Current Level, as of 03/20/2020, and Initial Level, divided by the Underlier’s Initial Level.
Intrinsic Value: For a given structured investment, a calculation of what the payment would be on a structured investment if the Maturity Date for that investment was today, 03/20/2020.

This is not intended to be an offer or solicitation to purchase or sell any security or to employ a specific investment strategy. The receipt of this illustration by any recipient is not to be taken as constituting the giving of investment advice by SIMON Markets LLC to that recipient. SIMON Markets LLC is not acting as your broker or advisor, nor does it have any fiduciary or other duty to you, in connection with any business engagement. SIMON does not provide tax, accounting, investment or legal advice, and the recipient should make its own independent investigations and analyses of the SIMON Platform and SIMON Markets LLC and its own assessment of all information and material provided, or made available, by SIMON Markets LLC.

Securities products and services offered by SIMON Markets LLC, a broker-dealer registered with the U.S. Securities and Exchange Commission, a member of FINRA / SIPC. Annuities and insurance services provided by SIMON Annuities and Insurance Services LLC. Please visit www.simon.io for complete disclosures, including terms of use and privacy policy.