Australian manager LM enters UK market

Australian group LM Investment Management has entered the UK market with the launch of its first structured product offering exposure to Australia’s benchmark equity index.

Developed by LM Exane Investment Solutions, a new joint initiative between LM and Exane Derivatives, the Bull ASX 200 Index – 100% Guaranteed Capital product will have a five-year lifespan.

It will return 110% of any gains in the underling index over the life of the product, provided performance does not exceed 60%. Should 110% of the final performance finish exceed 60%, investors will receive their initial capital plus 50% upside.

Unlike many similar structured products, Exane will offer a daily secondary market, with a maximum bid/offer spread of 1%. Its currency will be Australian dollars.

LM chairman and CEO Peter Drake believes Australia’s stable economy, which is now in its 19th year of growth, should entice investors to look away from domestic markets.

“Market turmoil across Europe has led investors to look beyond domestic markets to generate meaningful returns and introduce greater diversity to their portfolios. The Australian market offers a credible solution,” said Drake.

“The economy has grown consistently by an average 3.3% per annum since 1992. It benefits from low public debt and, significantly, its banking system did not participate in the toxic securities that brought the financial sector to its knees in other developed markets.

The closing date for investors is 6 December 2010.