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Five years of New Star

New Star Asset Management celebrates its fifth birthday this week as one of the highest-profile fund firms, with 8.1bn under management through acquisition and aggressive expansion. Founder and chairman John Duffield talks to Money Marketing about how he has built up the business.

Q: How different was setting up New Star compared with when you launched Jupiter?

A: “When I started Jupiter in 1985, I had very little money, no reputation and I did not really know if I could do it, so I had to be very careful and could not afford to make losses. I built Jupiter very carefully from within. I was very slow to recruit fund managers because I could not afford to pay them. The great star was William Littlewood, who came straight from university and grew with the company. We had a 1m income fund and 15 years later it was 1.6bn. At New Star, it was quite different, I had done it for 15 years, was not in any doubt about what to do and had money. I had a reputation and I could afford to take on senior people like Toby Thompson and Stephen Whittaker.”

Q: How did you look to differentiate the businesses?

A: “I made New Star more broadly based than Jupiter had been when I ran it. Jupiter had hardly any bond business and no property at all. When I left, I wanted to be as broadly based as possible. I wanted a bond business but the property business just came along.”

Q: You have brought in a number of big-name fund managers. Will that policy continue?

A: “I do not think we are likely to recruit any more well known fund managers. It is nicer and better to build up people from within and now the next generation here will be homegrown.”

Q: What criteria do you use to select a fund manager?

A: “I like my fund managers to be passionate about the business like me but I do not have a magic formula for finding the new stars. It is by trial and error and natural selection.

“You take five or six bright young men or women over a period of two or three years, give them about 1m and see how they get on.

“Natural selection working here includes bright young people like James Ridgewell, Guy de Blonay and Jamie Allsop who, hopefully when we look back in 15 years, will be stars.”

Q: How do you view recent changes to regulation and fund marketing?

A: “Over the last 10 years, the regulator has taken a much stricter line on how funds can be marketed. Ten or 20 years ago the big financial institutions did generic advertising but now there is a big move away from it.”

Big insurance companies are much more specific now, which is partly down to people like us making them work harder. We are not 200 years old so we have to be specific and we are.”

Q:How do you see the IFA market developing?

A: “There will be further polarisation of the IFA market. There will always be big groups and niche players who will continue to do well. Life in the middle is and will continue to be difficult for the remainder.”

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