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New Star Fof homes in on financial fund

New Star’s fund of funds has invested in another New Star fund for the first time, almost doubling its size and further fuelling float speculation.

The fund of funds team, led by Mark Harris, has put more than 15m into Guy de Blonay’s global financials fund, taking its assets under management to just over 36m. The financials fund has a 6.67 per cent stake in New Star stock which is likely to rise in value if the firm floats in November in line with market expectations.

Since joining New Star following its purchase of the rights to manage Edinburgh’s retail funds in November 2003, Harris has been keen to preserve his fund of funds’ independence. His team believes interest rates may be peaking globally and, in this environment, financial shares offer good value, with the global financials fund well placed to gain exposure to the upside. Harris is understood to have had to explain his team’s decision to invest in-house to New Star boss John Duffield.

Apart from its investment in New Star, de Blonay’s fund currently has a focus on banks with exposure to above-average growth markets such as Scandinavia and Greece. It also invests in special situations such as Banque Cantonal Vaudoise in Switzerland, which is restructuring.

Harris says: “Investing in another New Star fund has involved a higher level of scru-tiny and due diligence than investing outside the comp-any. This is a very high conviction investment and I have a great deal of confidence in Guy’s ability to outperform.”

Hargreaves Lansdown head of research Mark Dampier says: “If New Star floats in November, there is no doubt this will help the performance of de Blonay’s fund but bearing in mind that nobody else can buy into New Star, it would be interesting to see how well global financials would have done without these shares.”

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