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Structured value

German bank West LB which trades under the name Structured Solutions Group in the UK structured market, has started to increase its market share with good value products such as the latest offering, the early bonus plan three.

While rival products are having to incorporate two indices or put the original capital at risk to offer att-ractive returns, early bonus plan three is only linked to the FTSE 100 and offers full capital protection if held for the full six-year term.

It is structured as a six-year capital-protected inv-estment but if the FTSE 100 has grown by 7 per cent or more on the second anniv-ersary, the product matures and the client gets back their original capital plus 14 per cent growth. The plan is tax-efficient as those who hold the shares directly can offset any growth against their annual CGT allowance (currently 8,500 for this tax year). This is a very underused allowance so most investors will not have to pay tax on the proceeds.

If the FTSE has not grown by 7 per cent on the second anniversary, the plan continues for another 12 months. If on the third anniversary, the FTSE 100 has grown by 10.5 per cent or more, the plan will mature with a 21 per cent coupon and so on until the sixth anniversary. Despite the fact that previous cont-racts of this type did not require any growth for the return to be triggered, this is still a good value product within its peer group and worth a closer look.

Matthew Woodbridge is bond manager at Chelsea Financial Services


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