Why Autocall structured products deserve mainstream recognition after decades of resilience

By Ian Lowes, former Financial Adviser and owner of IFA firm Lowes Financial Management

For many in the UK advisory community, structured products remain a misunderstood corner of the investment landscape – often perceived as complex or niche.

Yet for over two decades, autocalls have quietly delivered equity-like returns with defined rules and built-in resilience across radically different market cycles.

With the FTSE 100 trading near record territory after a standout 2025, it’s time these instruments moved from the periphery to the mainstream of diversified portfolio construction.

Understanding the mechanics

An autocall is a contract with a major financial institution that offers early maturity when pre-set conditions are met on scheduled observation dates.

If a trigger is achieved – typically the underlying index at or above a specified level – the plan kicks out, returning capital plus a fixed coupon for each full year held. Coupons in current market conditions range from 6-10% per annum, depending on the structure and counterparty.

If the trigger is not met, the plan continues testing at subsequent anniversaries – a feature often described as giving ‘multiple bites at the cherry’. Most UK autocalls incorporate end-of-term capital protection barriers, commonly set at 60-70% of the index start level. If the plan doesn’t mature early and the index finishes below this barrier on the final observation, capital is at risk proportionate to the index fall. If the barrier holds, capital is returned regardless of trigger achievement.

This European-style barrier – tested only at term end – provides resilience against mid-term volatility, a critical differentiator from strategies requiring continuous threshold maintenance. Memory features ensure accumulated coupons are paid when maturity occurs, creating what practitioners call the snowball effect for delayed maturities.

Consistency

In 2025, 338 UK retail FTSE-linked, capital-at-risk autocalls matured, and every single one returned capital plus profit.

The average annualised return was 7.85%, achieved over an average term of just under two years.

Performance varied by product shape: Level contracts averaged 8.78%, Step-downs 7.34%, and Defensive designs 7.47%. Even bottom quartile returns reached 6.54% per annum – a floor that many traditional strategies would envy.

Extending the analysis across a whole decade (2016-2025) reinforces the pattern. More than 2,000 maturities occurred during this period. Of these, 99.7% delivered positive returns, with zero capital losses when held to term. Average annualised returns across the decade stood at 7.44%, with an average duration of 2.3 years. This consistency was maintained through Brexit uncertainty, the COVID-19 pandemic, inflationary shocks and geopolitical tensions. Few investment strategies can claim such resilience.

Autocalls mature when conditions are met and remain in force when they are not. This design creates an asymmetry that traditional funds cannot replicate.

No UK-domiciled fund delivered 7% growth in every calendar year over the same period; UK-focused funds averaged just 5-6% per annum by comparison*.

The FTSE CSDI innovation

One of the most significant recent developments has been the introduction of the FTSE Custom 100 Synthetic 3.5% Fixed Dividend Index.

Designed specifically for structured products, it tracks the same 100 companies, with the same weightings as the FTSE 100 but removes dividend forecasting uncertainty for issuers.

This technical refinement enables enhanced coupons for investors while maintaining high correlation with the headline index – investors can use the FTSE 100 as a practical monitoring proxy.

In 2025, FTSE CSDI-linked autocalls outperformed their FTSE 100 counterparts by 1.84% per annum. For advisers evaluating product specifications, this index choice represents a meaningful structural advantage without altering the fundamental risk-return profile clients understand.

As 2026 begins, the FTSE 100 has briefly crossed 10,000 for the first time, trading near record levels following a strong 2025. In these conditions, new autocalls could mature early – potentially on first or second anniversaries.

If a correction arrives first, the design’s strength becomes evident: multiple future observation dates provide opportunities for defined returns once markets recover, precisely when longer durations demonstrate their value.

Adviser considerations

Autocalls suit cautious/balanced investors seeking defined outcomes rather than open-ended upside; income or total-return seekers comfortable with capital-at-risk structures and fixed-term commitments; and diversifiers wanting rules-based equity exposure that doesn’t require strong growth to succeed.

They can mature in flat or modestly positive markets, making them useful complements to funds and shares by exchanging unlimited upside for defined potential returns and conditional protection. ‘Defensive’ autocalls can deliver strong returns even in falling markets.

The behavioural advantage is subtle but valuable. Autocalls crystallise outcomes when conditions are met and remain in force when they are not, moderating the impulse to chase recent winners or disinvest during downturns that undermines many retail portfolios.

Mainstream adoption

Historically, autocalls were hampered by paper-based processes and limited distribution channels. That era is ending. Emerging digital platforms aim to democratise access, reduce minimum investment sizes and enhance transparency – evolution that will finally bring structured products into mainstream portfolio construction.

With 99.7% positive maturities over a decade, average returns above 7% per annum, and resilience through every major market shock,

autocalls are not speculative plays but evidence-based solutions grounded in repeatable mechanics and two decades of real-world performance. They are ideal for advisers committed to delivering robust, understandable outcomes for their clients.

*Sources:

Trustnet (FE Analytics): Articles on consistent UK funds, top performers, and sector reviews (2025–2026 publications).

Morningstar UK: Fund performance data and category averages.

Investment Association (IA): Sector statistics and definitions.

Yodelar Insights: Sector return summaries for 2025 and multi-year periods.

Interactive Investor (ii.co.uk): Analyses of UK fund performance and consistency.

This material is for information purposes only. Past performance is not a reliable indicator of future performance. Investments carry a risk to capital and returns are not guaranteed.