Kick Out Structured Products: How Autocalls Deliver

What are kick out structured products?

Kick out structured products (also known as autocalls) are pre‑defined investments that combine a bond‑like component with derivatives to deliver returns linked to the performance of an underlying asset, typically an equity index. They offer the potential for early maturity, or “kick out”, when the underlying closes at or above a specified level on scheduled observation dates.

This structure allows investors to target equity‑linked returns with clearly defined outcomes, disciplined risk parameters, and defensive features such as step‑down kick‑out levels and capital protection barriers. The UK Structured Products Association (UKSPA) describes a kick out as a feature that pays a fixed return and matures early when market conditions are met, often with kick‑out thresholds reducing over time.

Where Do They Fit in a Portfolio?

Kick outs can complement equities and bonds, offering structured exposure with defined rules and defensive buffers. They are best suited for moderate risk profiles seeking predictable outcomes.

Reasons why investors consider kick outs

• Defined outcomes, early exits and downside protection.
  Autocalls provide pre‑defined returns and regular kick‑out opportunities while embedding capital protection barriers (e.g., 50% at maturity), so outcomes are known upfront and monitored against specific rules. 

• Portfolio diversification with rules‑based equity exposure.
  They offer exposure to indices like the FTSE 100, baskets of shares or specialist decrement indices, and can be held in tax‑efficient wrappers (ISAs/SIPPs), which is one reason they’ve become the most common structure in the UK retail market.

• A long track record in the UK market.
  Independent reviews show FTSE‑linked, capital‑at‑risk autocalls have matured in large numbers over two decades, with analyses highlighting consistently positive outcomes across many maturities (past results don’t guarantee future performance).

How kick out structured products work (step‑by‑step)

1. Start (“strike”) level: The plan records the underlying’s closing level on the start date. 

2. Observation dates: On scheduled dates (annual, semi‑annual, or quarterly), if the underlying meets the kick‑out condition (e.g., ≥ a reference level), the plan redeems early and pays a fixed return for each elapsed period.

3. Barrier at maturity: If no kick‑out occurs, capital is repaid provided the underlying is above the barrier at the final valuation date; if below, capital loss tracks the fall in the underlying from its start date (for capital‑at‑risk notes). 

Key benefits (and trade‑offs) to understand

• Defined, rules‑based outcomes: Terms (coupon, kick‑out level schedule, barriers, max investment term, fees) are disclosed upfront - improving transparency versus open‑ended funds.
• Early maturity potential: Autocalls can reduce duration if markets cooperate, returning principal plus a fixed growth return sooner.
• Defensive design: Many kick outs include step‑down kick‑out levels and capital barriers (e.g., 50%) to tolerate moderate declines while still offering defined growth. 
• Complexity and liquidity considerations: The FCA flag that retail customers can struggle to understand structured products, reinforcing the need for clear target‑market design, robust stress‑testing, and balanced disclosures. This is also why Hilbert also advise investors to talk to a financial adviser to be certain that any structured product is right for them.

> Explore our insights: Why Hilbert’s Structured Products Stand Out.

Risk considerations - for investors and their advisers to consider

• Underlying exposure: Index vs basket; methodology (e.g., equal‑weight, decrement). 
• Market risk and barrier type: If the index falls below the barrier at maturity, capital loss may occur; worst‑of baskets amplify this risk. It’s important to carefully review Brochures and KIDs for capital‑at‑risk and autocall details, including an explanation of these mechanics. There is also a difference between European vs American barriers so ensure you fully understand the % level and scenarios for a plan to breach at maturity. 
• Kick out schedule: Observation dates; step‑down levels and coupon structure can vary and impact how suitable these products may be for investors.
• Counterparty risk: Returns depend on the issuer/counterparty bank’s solvency; structured deposits differ (they may be FSCS‑eligible up to limits, while investment notes are not).
• Regulatory disclosures: UK KIDs require standardised risk/return information; the FCA is moving to a Consumer Composite Investments (CCI) regime with tailored methodologies for structured products—implementation from April 6, 2026 (firms may use KIDs until June 8, 2027).

Important: Past performance is not a guide to future results. Capital is at risk with investment‑type structured products. Always review the KID/plan brochure and seek professional advice appropriate to your circumstances.

> If you’d like to review the latest counterparty risk ratings for banks, visit Hilbert’s Advisory resources page and take a look at our Counterparty Datasets, which is updated monthly.

> Cian Bell, Hilbert’s Operations and Governance Associate, recently published this informative article; Understanding Counterparty Risk in Structured Products: A Practical Guide for Advisers

Where kick outs fit in a diversified portfolio

Autocalls can complement equities and bonds by targeting equity‑like returns with defined rules and defensive buffers, potentially improving risk‑adjusted outcomes in flat to moderately rising markets, and giving advisers structured, periodic review points (observation dates). 

In the UK, FTSE‑linked autocalls remain a mainstay, and independent guides report many products matured positively over two decades, again, not a guarantee, but evidence of how the design can work when paired with disciplined product governance. 

Current Hilbert kick out structured products (live offers)

If you’re exploring real‑time opportunities, Hilbert’s Kick‑Out Series offers plans with semi‑annual or annual kick‑out potential, step‑down triggers and defensive capital barriers all managed via our Infinity platform for end‑to‑end plan administration and 24/7 visibility.

• FTSE 100 EW45 Defensive Semi‑Annual Autocall – Issue 05Semi-Annualkick‑out potential from Year 3; kick‑out level reduces2.5% p.a.from 100% to 82.5%;50%capital barrier at maturity;8.7% p.a.potential fixed growth; SG Issuer / Société Générale.👉View the product page and documents👉 Deep‑dive explainer:A Defensive Route to Fixed Growth

• FTSE 100 EW45 Super Defensive Annual Autocall – Issue 27Annualkick‑out potential from Year 3; kick‑out level reduces5% p.a.from 100% to 65%;50%capital barrier at maturity;7.75% p.a.potential fixed growth; SG Issuer / Société Générale.👉See latest structured products

Best‑practice design and governance (FCA perspective)

The FCA’s thematic work emphasises that structured product providers and distributors should:

• Identify clear target markets and ensure products represent economic value, evidenced via robust stress‑testing.
• Provide clear, balanced information on risks and likelihood of returns, acknowledging behavioural research showing consumers can overvalue structured deposits without targeted disclosure. 
• Maintain effective product governance across the lifecycle (design, distribution, monitoring).

Industry associations echo these points, noting the need for transparency and education while recognising the role kick outs play in delivering structured, rules‑based outcomes for UK savers and investors. 

Final thought

Kick out structured products can be a powerful, rules‑based way to seek defined growth with defensive parameters and regular early‑maturity opportunities. The right plan depends on risk tolerance, time horizon, and portfolio objectives. We advise investors speak to a professional adviser and always review the KID to ensure clear understanding of barriers and kick‑out schedules before investing.

For those looking to diversify intelligently and invest with clarity, Hilbert’s structured solutions may be the missing piece in your portfolio. Please contact the team at hilbert@hilbert-is.com for more information or visit our Structured Product page for details of our latest solutions.

Frequently asked questions (FAQ)

1) Are kick out structured products suitable for cautious investors?
They can suit moderate risk profiles seeking defined outcomes and defensive buffers, but they are not cash and capital can be at risk depending on the barrier and underlying. Review the KID and plan brochure and consider advice.

2. What happens if the underlying index falls below the barrier?

If the index closes below the barrier at maturity, your capital will be reduced in proportion to the fall in the underlying.

3. How often do kick outs occur?

Observation dates vary by product—typically annually or semi-annually. Early maturity depends on market performance.

4. Are these products FSCS protected?

Investment notes are not FSCS protected. Structured deposits may be, subject to limits and issuer terms.

5. Can I exit early?

Early exit is possible but may involve costs and market value adjustments. Plans are designed for full term.

6. What’s the difference between a capital‑protected structured deposit and a capital‑at‑risk autocall?
Structured deposits generally protect capital (subject to FSCS and issuer bank terms), while investment notes may lose capital if barriers are breached. Returns and terms differ materially, always check documentation.

7. Why do some kick outs use “decrement” indices like FTSE 100 EW45?
Decrement indices subtract a fixed dividend rate from the price to simplify derivatives pricing and align with dividend assumptions. This is important because dividends materially affect autocall valuation and risk management. 

8. Can autocalls help with rebalancing?
Yes. The periodic observation dates create natural points to realise gains or redeploy capital, aiding discipline and portfolio management.

9. How do step-down features work?

Step-down reduces the kick-out trigger over time, increasing the chance of early maturity in flat or slightly down markets.

10. Where can I find more details?

Check the Key Information Document (KID) and plan brochure for full terms.

Disclaimer:

Structured products are complex and not suitable for everyone. Before making any investment decision you should read the Key Information Document (KID) and the brochure in full, so that you understand how the product works, the associated risks, the costs and the possible outcomes.

Hilbert does not provide investment or tax advice. If you are unsure whether an investment is right for you, you should seek professional financial advice. Hilbert’s products are available via a regulated platform.

Your capital is at risk and you may lose some or all of the money you invest. Early encashment may result in a return lower than the amount invested. Tax treatment depends on individual circumstances and may change.