Max Darer, 24/07/2024
Monday marked a significant milestone in the UK retail structured product sector, twenty- years since the very first autocallable structured product matured, the UK retail sector has now seen the 2,000th FTSE only capital at risk autocall mature. The FTSE linked capital at risk autocall is the mainstay of the UK sector, accounting for approximately 60% of autocall issuance and maturities to date.
UK retail FTSE* linked capital at risk autocall maturities
Total maturities to July 2024 |
2005 |
Number returning a gain |
1992 |
Number returning capital only |
13 |
Number realising a loss |
0 |
Average annualised return |
7.62% |
Upper quartile |
10.11% |
Lower quartile |
5.62% |
Average term |
2.2 years |
Collectively the maturing 2005 plans have achieved average annualised returns of 7.62% over an average duration of 2.2 years with upper and lower quartiles of 10.11% and 5.62% respectively. These bank-based contracts delivered returns exactly in line with their pre-defined terms for the prevailing market conditions. Despite the consistent success delivered over more than two decades these investments are still relatively unknown amongst retail investors and even many advisers. In the 21 years since the first autocall was issued, just thirteen have matured returning capital only, and none have returned a loss. This demonstrates the effectiveness of the baked-in risk mitigation strategy that these investments offer.
The most prevalent shape of FTSE autocall is the at-the-money (where the index needs to be at, or above the starting level to trigger maturity), accounting for over 51% of all FTSE only autocalls, followed by the step-down (where the maturity trigger level reduces over the term) (35.9%), defensive (maturity trigger level is below the starting level) (9.5%) and hurdle contracts (trigger level is above the starting level throughout the term) (3.5%).
FTSE autocalls continue to reward investors with excellent results whilst presenting advisers natural and regular opportunities to present clients with positive performance news.
With a regular flow of FTSE autocalls being issued via 7 providers utilising 10 different significant counterparties the sector continues to go from strength to strength.
*FTSE incorporates plans linked soley to the FTSE 100 or its very close, 99%+ correlated 'cousin' the FTSE CSDI, which tracks the same 100 stocks with the same weightings but accounts for dividends differently.
Source: StructuredProductReview.com
Structured investments put capital at risk.
Past performance is not indicative of future results.
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