A Kick Out plan (Autocall investment as they are sometimes called) are more commonly known as a market-linked investments which can automatically mature or ‘kick out’ returning the original capital and the stated returns. The early maturity is dependent on pre-determined market conditions being achieved (typically a pre-determined barrier on a set observation date) and most plans offer the potential to mature early each year.

Therefore, the investor has the benefit of knowing at outset the conditions that need to be met in order to produce the stated returns, thus providing a defined return for a defined amount of risk. The plans that follow an index are considered lower risk than those that follow a basket of shares, however the latter type of plan normally offers the higher returns.

In combination with an investment term normally in the region of 5 to 6 years, the mechanics just outlined create a plan which is relatively easy to understand, with the early maturity normally dependent on the underlying investment finishing higher at the end of each year than its starting value. This pre-defined risk v reward is an attractive feature for many investors.

When reviewing all of the plans available in the market, Fair Investment pays particular attention to the underlying asset which the plan is linked to. Nearly all of the plans we list are linked to the FTSE 100 (FTSE) on the basis that this index is widely recognised as the proxy benchmark for most investment managers and the historical volatility is familiar to many investors.