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Product Matters

It has been a while since there has been anythingapproaching excitement in the world of structured products and while the entry of German bank West LB (under the Structured Solutions Group brand) into an overcrowded market would not normally get the pulse racing, the nature of the first product launch has certainly caught my eye.

Although West LB,a major player in its domestic market, denies that it is simply trying to buy market share, the Performance Seeker is a very good value product.

It is a six-year capital-protected investment plan with the return linked to the performance of the FTSE100, S&P 500 and the Nikkei 225.

The investor benefits from a hindsight structure, where the weighting of the indices depends on the performance over the lifetime of the plan (the best-performing market will have a weighting of 50 per cent, the second-best 30 per cent and the worst 20 per cent).

Most important, the product comes without the usual smoke and mirrors (averaging,extra months and downside gearing) which have done so much to lose the trust of retail investors in recent years.

Naturally, it will take some time for West LB to get its brand recognised by UK IFAs but, judging the standard of its first offering, the company should be a welcome addition to the UK structured products market.

Darius McDermott is managing director of Chelsea Financial Services

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