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(Bloomberg) -- Investors in Swiss structured products played it safe again last year and left a lot of return sitting on the table.

The most popular securities were “yield enhancement,” which pay a fixed amount and returned 4.2 percent, data from the SIX Structured Products Exchange show. That compares to a 12 percent return on “participation” or “tracker” products, which capture the full gains of a linked stock, though also losses too.

That makes the fourth year in a row that the more popular yield category has underperformed trackers, the data show. The MSCI World Index of developed-country stock markets gained in 2014 for the third year in a row, aided by subdued volatility and record-low interest rates in Europe.

“Yield enhancement products remain the most popular products and I don’t see that changing, but if you have a strong market movement on the upside, then they tend to underperform,” said Andre Buck, head of sales for the SIX Exchange in Zurich. The same thing happens with capital-protected products, he said.

The exchange tracks the performance of the products through indexes it developed with Derivative Partners Research Ltd. The indexes are made up of certificates linked to the Swiss Market Index, a benchmark of Swiss stocks that includes companies such as Novartis AG and Nestle SA.

Yield products were traded 77,000 times last year compared with 66,000 for trackers and have more than three times as many listings, according to exchange data. Typically, they pay higher coupons than investment-grade corporate bonds as long as the linked stock trades above a preset level, though investors don’t participate in share price gains.

Higher Returns

“Swiss investors like a bond with a coupon in their portfolios, and that’s what a reverse convertible is, not counting the risks particular to it,” said Buck, referring to a popular type of yield product that converts to shares when the stock price tumbles.

In 2013, participation products returned 19.5 percent, almost five times as much as the yield securities, according to exchange data. The last time yield-enhancement products outperformed other categories was in 2010, when they returned 5.7 percent.

That year, the Swiss Market Index finished the year down 1.7 percent. Since 2012, the Swiss benchmark has returned an average of 14.9 percent, Bloomberg data show. For the first time since 2009, analysts tracked by Bloomberg are unanimously bullish on stocks in 2015, estimating an average return of 8.1 percent for the Standard & Poor’s 500 Index.

To contact the reporter on this story: Yakob Peterseil in London at ypeterseil@bloomberg.net To contact the editors responsible for this story: Richard Bedard at rbedard2@bloomberg.net Charles W. Stevens

Bloomberg