Happy first birthday, Auto. Blow out the candle.

Risk-management strategies are having a moment across the ETF industry from buffer ETFs and trend-followers to covered-call funds. Issuers have embraced a common pitch: Give up some upside in exchange for downside protection and steady income. One of the fastest-growing corners of that defensive toolkit is autocallable ETFs. Since launching about a year ago, the category has expanded to roughly two dozen funds managing around $2.5 billion in assets.

At their core, the ETFs hold portfolios of structured notes with varying terms and triggers. Structured notes themselves are long-standing derivatives-based instruments that now represent a multi-trillion-dollar global market. But the…