View more on these topics

Income FOF from New Star

New Star has established a unit trust fund of funds that aims for growth and an estimated net income of 3.5 per cent a year while preserving investors original capital

New Star cautious portfolio will typically have 20 holdings and will invest mainly in regulated funds that in turn invest in equities and fixed-interest securities.

The fund also has the ability to hold other investment vehicles including investment trusts, exchange traded funds, property funds, unregulated funds, money market instruments and derivatives. Although the portfolio will have a UK bias it will also have some global exposure.

In comparison with the seven existing New Star fund of funds range this fund will offer the lower level of potential risk because at least 40 per cent will go into fixed interest securities to help boost the funds income whilst reducing volatility. It is also the fist fund of funds in the range to offer the potential for both income and growth.

The fund of funds team, headed by Mark Harris, will try to find a balance between risk and return when selecting and blending funds in this portfolio. Harris and co-manager Craig Heron will set informal limits on the portfolios exposure to different assets and regions. The fund can hold up to 5 per cent more or less in any region compared with its benchmark, IMA Cautious Managed sector average.

The team can use derivatives to control the level of exposure to different markets and this may reduce the transaction costs of changing the underlying funds.
This product fills a gap in New Stars fund of fund range as an income producing fund for cautious investors which also provides potential growth. However, the charges are taken from the capital which, as well as constraining future growth, may also cause the level of income to fluctuate.

Recommended

Noble adds health VCT to range as it buys development specialist Sitka

Noble Fund Managers has bought specialist development capital firm Sitka. The deal means that NFM now has three venture capital trusts under management, with an investment team of 16. Sitka’s health fund VCT, run by Louis Nisbet and his team, will join NFM’s VCT and income and growth VCT. The health fund VCT invests in […]

Day of the mifid

Regulation A monstrous piece of legislation is lumbering towards us, says Standard Life group compliance director Phil Hay

Delay reaction

Nicola York discovers the industry’s reaction to Axa’s call for a year’s delay to the Sipp extensions

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment