Measuring returns: Structured Products vs Funds: How Do the Returns Compare?

Structured Products vs Funds: How Do the Returns Compare?

Structured products are often judged on their complexity. Perhaps they should be judged on something considerably simpler: Actual returns.

An analysis of 221 Hilbert Investment Solutions growth autocall products that matured between 30 September 2021 and 30 September 2026 produced an average annualised return of 10.67% per annum. The median annualised return was 9.85%, while the highest annualised return was 35% and the lowest was 5.75%.

Most notably, all 221 products generated a positive return, with no losses recorded among products held to maturity.

The analysis covers Hilbert's growth autocall products only and does not include its income products, where comparable historical data is not currently available in the same format.

So how does that performance compare with more traditional investment funds?

Putting the numbers into context

Investment Association (IA) sector data provides a useful way of looking at the performance of the average fund across different investment categories. The data is supplied by Morningstar and provides five-year cumulative performance figures.

Over the five years to August 2026, the average fund in the IA UK All Companies sector delivered a cumulative return of 34.20%. Annualised, that equates to approximately 6.10% per annum.

The average IA Global fund delivered a cumulative return of 42.20%, equivalent to approximately 7.30% per annum, while the average IA North America fund delivered 59.80%, equivalent to approximately 9.80% per annum.

By comparison, the 221 Hilbert growth autocalls analysed delivered an average annualised return of 10.67%.

This is not intended to suggest that structured products are universally superior to funds.

The two are fundamentally different investments, with different risk profiles, objectives and potential outcomes. However, the figures do provide useful context.

A different way of generating returns

An actively managed fund gives the manager discretion over the assets held within the portfolio. Investors participate in the underlying market performance, both positive and negative, and ultimately returns depend on the investment decisions made by the manager.

A structured product, by contrast, has a predetermined payoff based on specific conditions being met.

For an autocall, that might mean an underlying index or basket needs to be above a specified level on an observation date for the product to mature early and pay its predetermined return.

The investor therefore does not necessarily need the underlying market to deliver growth. Instead, the investment is designed around a set of conditions that determine whether the targeted return is achieved.

This creates a fundamentally different investment proposition.

A fund investor might be asking: “How much will this market or portfolio grow?”

A structured product investor is asking: “What conditions need to be met for me to receive my predetermined return?”

Consistency matters

The headline average return is only part of the story.

The median annualised return across the 221 structured products was 9.85%, compared with the 10.67% average. The relatively narrow gap between the two figures suggests that the average result was not simply driven by a small number of exceptional outcomes.

Perhaps most strikingly, every product in the analysis generated a positive return when held to maturity.

That should not be interpreted as suggesting structured products cannot lose money. They can. Depending on the structure, investors can be exposed to capital loss, underlying market performance and issuer credit risk.

The results simply show what happened across this particular population of matured growth autocalls.

Different tools for different objectives

The comparison with fund performance also highlights why structured products should not be viewed as competing directly with traditional funds.

The two can sit alongside each other within a diversified portfolio, with structured products acting as a support structure within the overall portfolio architecture.

A fund may be appropriate for an investor seeking long-term capital growth and willing to accept the full volatility of the underlying market.

A structured product may appeal to an investor who is comfortable accepting defined risks in exchange for a more predetermined return profile.

The key point is therefore not that one investment is necessarily “better” than the other, but that they can behave differently and potentially serve different roles within a portfolio.

Judging the outcome

The performance data provides an opportunity to reconsider how structured products are assessed.

The five-year analysis of 221 Hilbert growth autocalls produced an average annualised return of 10.67%, compared with annualised returns of approximately 6.10%, 7.30% and 9.80% for the average funds in three relevant Investment Association sectors over broadly comparable periods.

The comparison has limitations, and the investment structures are clearly different. However, it does demonstrate that structured products can deliver returns that compare favourably with those achieved by the average traditional fund.

Ultimately, investors should judge any investment according to its objectives, risks, costs and the outcomes it delivers.
Perhaps structured products deserve to be judged on exactly the same basis?