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Changes continue to ring for New Star

It seems that the inevitable has finally happened as New Star boss John Duffield has this week replaced Stephen Whittaker as manager of the group’s equity income trust.

It has been well-documented that performance in the UK has not exactly been rosy for the firm, but when it comes to UK equity income it would be no exaggeration to say that performance has been dire.

The £253m UK equity income trust has comfortably produced bottom quartile performance over three and five years in the IMA UK equity income sector.

Performance concerns are heightened by the fact that the only fund below Whittaker is fellow team mate Toby Thompson on the higher income offering.

Looking at Whittaker’s performance in particular you can understand the concerns for Duffield. The past 12 months alone have seen him lose 32 per cent, according to the IMA. He initially took on the fund in November 2006 from Tim Bray.

The performance saw him black listed by Principal Investment Management in the group’s white list offering published this week, which rates UK equity income funds with a five year track record, every six months.

Indeed the group says it has spared Whittaker from a sale thanks to the appointment of Charles Deptford and RCM’s Trevor Green to the desk. Perhaps they knew more than they were letting on.

Whittaker has already been replaced on the equity portion of the soon to be merged tri-star fund, with Edward Collins taking his role and now this announcement leaves the joint chief investment officer with UK growth as his sole fund management responsibility, another fund stuck in troubled times in the bottom quartile of UK all-companies in the past year having lost over 40 per cent.

Any ideas that Duffield will not make the tough call to make changes has long since been put to bed but with other big names struggling the question will be asked if – or indeed when – will the axe next be wielded?

Hargreaves Lansdown investment manager Ben Yearsley says: “This is really no surprise bearing in mind the dreadful performance from the fund. Both he and Thompson sit at the bottom of the UK equity income sector for mutually exclusive reasons, but the fact they are both there probably was a factor in this change. The good news is that they have replaced him with a manager in Charles Deptford who is arguably better suited to managing a fund like this.

“Whittaker was thought so well of at Invesco Perpetual and was on our Wealth 150, though he was taken off some time ago now. Maybe the environment of working with the likes of Neil Woodford helped, but one thing I would not put the blame on is the number of responsibilities he had at New Star. He made a number of bets with the banking and online gambling sectors that went wrong and didn¹t reassess the position and became entrenched, which has to an extent been his undoing.”


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