More than half of structured products outstanding are a type known as autocallables, fixed-term investments that can mature early depending on the performance of their underlying asset. They don’t technically provide full capital protection, but they offer higher coupons to compensate.
These complicated vehicles can deliver wildly different outcomes, from high coupon payments to a large loss of principal. Autocallables are a key force behind the structured boom because they regularly redeem early in a rising market and that cash is often reinvested, helping increase overall market activity, according to Joost Burgerhout, head of Marex Financial Products.
