A Guide to Autocalls: 2024 Update

Performance comparison

Following the recent 20th anniversary of the maturity of the first FTSE linked autocall in the UK retail market, we analysed the returns achieved by the now 2,000+ maturities investors’ have enjoyed over the period. We compared these returns to the performance of the main Investment Association mixed asset sector averages over the same durations. The results, shown in the chart, speak volumes. It is important to recognise that structured investments are contracts issued by banks and other significant financial institutions but if the

issuer becomes insolvent during the term, it will not be able to meet its contractual obligations. Investors will be senior unsecured creditors but likely facing significant losses, taking several years to potentially recover pennies on the pound. Four FTSE 100 linked autocalls issued by Lehman Brothers to the UK retail market fell foul of this when the bank collapsed in 2008. Investors in these contracts eventually recovered between 76.53% and 97.48% of their invested capital but the recovery process took many years to conclude.

Maturity performance of the first 2000 FTSE linked capital at risk UK retail autocall structured investment maturities (03/07/2003 to 23/07/2024); average annualised return achieved compared to IA sector average performance over the same durations

7.62%

8.00%

6.84%

7.00%

6.00%

4.74%

5.00%

4.00%

The first 2000 FTSE* linked capital at risk autocall maturity average performance

IA Mixed Investment 40 85% shares sector average (Previously the IMA Balanced Managed Sector)

IA Mixed Investment 20 60% shares sector average (Previously the IMA Cautious Managed Sector)

2.85%

3.00%

2.00%

IA Mixed Investment 0-35% shares sector average

1.00%

0.00%

* F TSE incorporates plans linked solely to the FTSE 100 or its very close, 99%+ correlated ‘cousin’ the FTSE CSDI, which tracks the same 100 stocks with the same weighting but accounts for dividends differently. Returns gross of advice, intermediation and platform fees Sources: StructuredProductReview.com & FE Analytics

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