As a mirror fund, this is a Friends Provident International fund that invests exclusively in the New Star European Growth fund except for a small amount held in cash. This means the price of the Friends Provident International fund will be different from the underlying fund but its performance will move in line with it.
The New Star fund was launched in July 2001 and aims for growth by investing in European companies excluding the UK. Fund manager, Richard Pease, has 22 years’ investment experience, He previously managed the Jupiter.
Pease and his team take a bottom-up approach, with stock selection based on whether a company has sound business strategies, good quality management, sound finances and attraction valuations. Favoured companies will provide strong earnings with growth potential. They are likely to work in niche markets or have a product or service that is difficult for competitors to copy.
Pease looks at how the companies are managed and talks to the management teams, competitors, suppliers and customers. He also considers factors such as free cashflow and how the valuation compares with a company’s peer group and the wider market.
The portfolio will contain around 70 stocks, around half if which are likely to be small and medium sized companies. Companies of this size have higher growth potential and are less researched than bigger companies, which should throw up good investment opportunities.
Investors may see the addition of this mirror fund as a positive move as they can now access the skills of Pease and his team through their Friends Provident International pensions and bonds.
A high volume of mergers and acquisitions has helped growth in European markets but there are concern is that growth will slow down in response to a US slowdown. Higher interest rates aimed at helping the higher inflation countries within Europe may also contribute to slower growth.