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Market volatility boosts kickouts

The recent stockmarket volatility is creating more competitive terms for autocall products.

Sales of autocall or kickouts suffered recently with uncertainty surrounding their Isaeligibility. However, providers and advisers are predicting increased appetite for the products as continuing volatility and lack of stability in the markets offer investors a better premium for taking risk to their capital.

This week, Barclays reissued its six-year defined returns plan annual kickout with improved rates, offering a return of 10 per cent if the FTSE 100 is at or above its starting level on each annual anniversary.

Managing director Colin Dickie says: “The spike in volatility has translated into better terms, although those closing now have greater visibility of their FTSE entry level – a point often forgotten when comparing regular issuance products.

“The volatility hike means you are able to gain more upside than previously within capital-at-risk structures, which really does suggest the potential rewards are there for those prepared to take risk.”

Baronworth Investment Services director Colin Jackson says: “There was a little problem with our friends at the Revenue but that has been resolved and the providers know how to structure products so as to not fall foul.

“We are seeing a number of kickouts that have come out or are going to come out and we are getting more competitive returns. The outlook is good.”

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