StructuredProductReview.com has released a new guide which provides an independent review of the sector’s evolution and performance, as structured product autocalls reach their 20-year anniversary.
Labelled as one of the most successful UK retail investments in the 21st century, autocalls have emerged as the preferred investment vehicle within the structured products sector. The new guide, which is subtitled ‘delivering good outcomes for retail investors’, is designed to demystify autocalls and dispel common misconceptions, offering insights into their history and features.
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 outcomes, making them accessible to a range of 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 those, eight returned capital whilst the rest general gains. The average annualised return has been 7.7% over an average duration of just over two years.
Founder of StructuredProductReview, Ian Lowes said: “Autocalls have largely delivered as a reliable solution for investors.
“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 ISAs and SIPPs. For investors of £500k or more to invest in a single solution, customised autocalls can be created.
Lowes added: “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.”
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