Structured product autocalls – one of the UK’s most successful retail investments of the 21st century – are marking a significant milestone.
Celebrating their 20th anniversary, autocalls have emerged as the preferred investment vehicle within the structured products sector.
StructuredProductReview.com, the UK’s leading structured product research, information and education portal for Professional Advisers, champions autocalls as a reliable investment option regularly overlooked by Financial Advisers.
Autocalls offer predefined returns at predetermined dates, providing investors with market-linked investments that safeguard their original capital at maturity from all but the most extreme scenarios. They can be highly tailored but retail autocalls typically offer straightforward and easy-to-understand outcomes, making them accessible to a wide range of investors.
To celebrate this milestone, the team at StructuredProductReview.com has put together ‘A Guide to Autocalls – A 20-Year Evolution’. Subtitled ‘Delivering Good Outcomes for Retail Investors,’ the guide provides an independent review of the sector’s evolution and performance. It aims to demystify autocalls and dispel common misconceptions, offering insights into their history and features.
Ian Lowes, founder of StructuredProductReview, emphasises the proven success of structured product autocalls, stating: “Twenty years of historic performance shows that autocalls have largely delivered as a reliable solution for investors.”
Over the years, autocalls have primarily used the FTSE 100 index as their underlying asset and over 1,600 have matured to date. Of these, eight returned capital only, while the rest generated gains. The average annualised return has been 7.7% over an average duration of 2.2 years.
Ian Lowes continues: “For most advisers, the FCA’s impending Consumer Duty deadline is at the front of mind. Principle 12 states that ‘a firm must act to deliver good outcomes for retail investors’. Autocalls have been helping advisers do so for 20 years now and are a proven, successful solution for investors. They could be the key for firms to meet these requirements.
“Also, autocalls are structured to provide periodic touchpoints for conversation between an adviser and client. With regular dates for potential maturity, there’s a natural reason to engage and reach out to clients at regular intervals, more often than not to discuss positive outcomes.”
Autocalls can offer tax-efficient investment options, allowing individuals to hold them within accounts such as ISAs and SIPPs. For investors with £500,000 or more to invest in a single solution, customised autocalls can be created. Plan managers play a crucial role in making autocalls accessible to retail investors by purchasing securities from counterparty banks and packaging them into investment offerings with minimum investment thresholds as low as £5,000.
Ian Lowes adds: “The structured product and autocalls sector is continuously evolving and becoming easy to follow. Regulated and offering a high probability of positive outcomes, while providing contingent capital protection against all but the most extreme events, autocalls have earned their place as a valuable investment tool. We hope our guide will serve as a reference point and an educational resource for Financial Advisers who have yet to explore the potential of autocalls for their clients.”
