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Weighting time

WEST LBPerformance SeekerType: Guaranteed equity bondAim: Growth linked to the performance of the FTSE 100, S&P 500 and Nikkei 225 indicesTerm: Six yearsReturn: 100% of the growth in the weighted basket of indices comprising 50% of the best-performing index,30% of the second-best-performing index and 20% of the worst-performing indexGuarantee: Original capital returned in full regardless of performance of indicesClosing date: January 24, 2004, January 7, 2004 for Pep/Isa transfersCommission: Initial 3%Tel: 01189 563 193Performance seeker is a capital-protected bond designed by German bank West LB and the product is linked to the performance of a weighted portfolio of three stockmarket indices.

Baronworth Investment Services director Colin Jackson feels this product is innovative and should be popular with investors who are looking for growth only with capital protection..

Jackson says: “The strength of the capital protection is only as good as the strength of the underlying assets. In this case, they are provided by West LB AG which is AA rated by Standard & Poor’s.”

He regards this as an interesting product which provides a novel approach to the level of growth which is linked to a basket of indices, namely the FTSE 100, S&P 500 and Nikkei 225 indices.

He says: “The basket is weighted according to the performance of the indices. Other similar products base their returns upon the average growth of the basket and are not weighted.”

Jackson feels that with this investment, the investor has a distinct advantage as 50 per cent of the growth is calculated on the best-performing index while the remaining 50 per cent is calculated on the other two indices. He adds: “If all of the indices perform roughly the same, then the weighting advantage goes by the board. But from a tax point of view, this product has two advantages. First, it can be put into an Isa wrapper. Second, any gains will be subject to capital gains tax.

“The majority of people do not utilise their CGT allowance so all or part of the gain could be tax-free, leaving the Isa allowance for something else.”

Jackson has little to say about any negative aspects of the product except that there is no provision for income, which is very much in demand.

Highlighting possible competitors Jackson says: “There have been, and continue to be, a whole raft of products offering growth linked to the performance of an index or indices with capital protection. So far, we have not come across one where the basket of indices is weighted so we cannot make a direct comparison.”

However, he cites the Nvesta secure multi tracker plan 2 as the nearest competitor which is linked to the same indices as the West LB product for a similar investment term. Jackson explains: “It offers investors a 105 per cent participation in any rise in the basket at maturity but does not have the advantage of weighting.

BROKER RATINGSSuitability to market: GoodInvestment strategy: GoodAdviser remuneration: GoodOverall 8/10


Special delivery

Anthony Bolton, the long-serving superstar manager of Fidelity’s flagship special situations fund, is celebrating the silver anniversary of the fund by confirming that he will continue to run the fund until at least 2006.


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